The SEC warns again of the risks of investing in Bitcoin ETFs

The US Securities and Exchange Commission (SEC) reiterated the risks of investing in funds with a focus on Bitcoin futures in a staff note on Thursday highlighting the tough battle that investors are facing.

In an investor newsletter emailed to them, “staff pleaded with investors to carefully consider a fund with potential exposure to the bitcoin futures market in order to carefully weigh the potential risks and benefits of bitcoin futures.” Investment is “highly speculative”.

This is the second recent SEC warning about Bitcoin’s risks. Last month, the agency sent a note to investors stressing that due to Bitcoin’s volatility, it may not be safe to support an ETF under the Investment Advisors Act of 1940.

Most Bitcoin ETF applications are filed under a different law, the Securities Act of 1933, as these laws handle such applications differently. The SEC has long warned against filing Bitcoin products under the 1940 law.

This comes at a time when large traditional banks and hedge funds are increasingly showing interest in cryptocurrencies, both for individuals and businesses. In March, investment bank Morgan Stanley began offering clients access to bitcoin funds, and in May Wells Fargo announced the launch of a crypto fund.

Just yesterday, Moelis & Co’s investment banker Ken Moelis began looking at the crypto space as a potential business opportunity.

Annie

According to Coindesk

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