SEC and CFTC warn investors against Bitcoin futures trading in funds – regulation Bitcoin News

The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have warned investors about the risks of investing in funds with exposure to Bitcoin futures.

  • The SEC published an investor warning on Thursday about fund trading in Bitcoin futures. The warning comes from the Office of Investor Education and Advocacy (OIEA) of the SEC and the Office of Customer Education and Outreach (OCEO) of the CFTC.
  • They pointed out that some funds could trade bitcoin futures contracts to get exposure to bitcoin and stressed that the cryptocurrency is “a highly speculative investment”. The document warns:

Investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and the potential for fraud or manipulation of the underlying Bitcoin market.

  • They urge investors considering investing in a fund that will buy or sell Bitcoin futures “carefully weigh the potential risks and benefits of investing” by considering factors such as their risk tolerance, disclosure of the fund’s risks and the Identify possible loss of investment.

  • The warning also warns that an increase in the price of Bitcoin may not increase the value of the Fund’s positions in Bitcoin futures contracts, and gives several reasons. For example, the Funds may not have direct exposure to the underlying assets of the contracts. In addition, the prices for Bitcoin futures contracts may vary depending on the delivery month and may differ from the BTC price itself. Futures contracts also periodically expire, which causes fluctuations in portfolio exposure as expiring futures positions are usually converted into new contracts.
  • Meanwhile, the new SEC chairman Gary Gensler has urged increased oversight of the crypto space, particularly the crypto exchanges. The SEC has so far taken 75 crypto-related enforcement actions against the industry. Gensler has called on Congress to pass a law to protect investors.

What do you think of the SEC and CFTC warning about funds investing in Bitcoin futures? Let us know in the comment section below.

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