Cryptocurrency News

SEC Warns Investors of Risks of Bitcoin Futures

The US Securities and Exchange Commission (SEC) has warned investors about the risks of trading bitcoin futures – citing market volatility, lack of regulation and fraud, to name a few issues.

10 in june Investor Alert In the bulletin, the SEC outlines key points that investors should “carefully consider” before investing in funds that buy or sell bitcoin futures.

“Investors should understand that bitcoin, which involves gaining exposure through the bitcoin futures market, is a highly speculative investment,” the bulletin said.

This latest bitcoin-related risk warning from the SEC builds on a note sent last month, which warned investors “interested in investing in mutual funds with exposure to the bitcoin futures market” to think twice because of the risks. Has been.

The latest warning notes that while investing in all types of funds carries risk, funds that “buy or sell bitcoin futures may have unique characteristics and increased risk compared to others”:

“Investors should consider the volatility of the bitcoin and bitcoin futures markets, as well as the lack of regulation and the potential for fraud or manipulation in the underlying bitcoin market.”

The SEC also highlighted that the price of bitcoin is not necessarily related to the value of the fund that holds bitcoin futures positions. According to the SEC, this is partly due to the potential for “underlying assets” not funds with direct exposure.

“Futures contract prices may vary by months of delivery and may differ from the spot price of the underlying commodity,” the bulletin read.

The bulletin also emphasized warnings such as “investors should pay attention to the level of risk they are taking compared to the level of risk they are comfortable with,” which led finance and risk researcher and author Naseem Taleb on Twitter. With gave rise to a humorous response. “I’m so grateful we have the SEC, thank goodness!”

related: JPMorgan points to weak bitcoin futures as a sign of bear market

This warning is the second time this week that US regulatory bodies have come out publicly against cryptocurrency derivatives. On June 8, Commodity Futures Trading Commission (CFTC) Commissioner Dan M. Berkowitz said he believed DeFi market for derivatives is a “bad idea” and doesn’t see how “they are legal under the CEA.”

Caitlin Long, Founder and CEO of Avanti Financial is tracking the narrative of public statements made by US governing bodies, which she says “crypto regulatory crackdown” She sharp Earlier today the SEC was even more concerned about foreign platforms:

“The SEC is issuing this investor warning to onshore exchanges, which only offer 2.5x leverage – just imagine how it views offshore exchanges offering >100x leverage.”