The US SEC has once again warned investors about the risks of investing in cryptocurrencies and the Bitcoin futures market. The corresponding notification was published last Thursday.
This is the second recent warning that the Securities and Exchange Commission has sent out regarding Bitcoin’s risk. Last month, it sent investors a note emphasizing that backing an exchange-traded fund under the Investment Advisors Act of 1940 may still be unsafe due to Bitcoin’s volatility.
The current SEC warning concerns the work with funds that have access to Bitcoin.
The regulator notes that although such instruments are becoming more popular, they still remain “highly speculative”. Such investments described as highly speculative. The cryptocurrency market is overly volatile, there is a lack of regulation, and there are a lot of cases of fraud. Therefore, investors need to “carefully weigh” all the pros and cons.
“Protecting investors and assessing the regulatory compliance of these funds is a top priority for staff”, the SEC said.
The regulator notes that it will “closely monitor and evaluate” the behavior of Bitcoin funds.
The warning notes that there are risks when investing in any funds. But “trusts that trade Bitcoin futures have unique characteristics and an increased level of risk”.
The SEC reminded in its warning that the value of shares of funds investing in Bitcoin may not reflect the value of the asset itself. As well as the price of Bitcoin futures depends on many factors. The prices of futures contracts depend on the month of their execution. They can be very different from the spot price of a particular item.
At the same time, the notification says that it has no legal force. It serves as a reflection of the opinion of the department’s employees.
In the SEC leadership the positions of the opponents of the cryptosphere are strong
This is far from the first SEC warning about the risks of investing in cryptocurrencies. A month ago, the regulator issued a similar document in which it warned against investing in futures and other derivatives on Bitcoin. Most likely, this is why the commission has stubbornly refused to approve the launch of Bitcoin ETF exchange-traded crypto funds over the past several years.
Opponents of the cryptosphere are still strong in the SEC leadership.
This comes at a time when large traditional banks and investment funds are increasingly announcing their interest in cryptocurrencies, both personal and corporate. In March, investment bank Morgan Stanley began offering clients access to Bitcoin funds. And in May Wells Fargo announced that it would introduce a cryptocurrency fund.
Just yesterday, investment banker Ken Moelis began looking at the crypto space as a potential business opportunity.
Positive expectations for Gary Gensler
Note that earlier Gary Gensler turned to Congress with a proposal to develop a regulatory framework for regulating the cryptocurrency industry. He believes that the crypto asset market could benefit from increased investor protection.
In general, the arrival of the new head of the SEC is associated with positive expectations. He is regarded as a crypto-savvy person as he taught a course on cryptocurrencies and blockchain at the Massachusetts Institute of Technology.