The United States Securities and Exchange Commission (SEC) alongside the Commodity Futures Trading Commission (CFTC) has warned investors against Bitcoin Exchange Traded Funds (ETFs). SEC says that these Bitcoin funds are highly speculative, warning investors to apply caution. The deterrent somewhat indicated the reason for SEC’s hesitance to approve Bitcoin ETFs.
The offices of the SEC Investor for Education and Advocacy (OIEA) and the CTFC Customer Education and Outreach (OCEO) published a statement where they made their hesitations known. The joint statement advises investors to focus on the level of risk they are taking in comparison with the risks that they’d be comfortable taking.
The volatility involved in the Bitcoin futures contract was also highlighted in the statement. The Securities and Exchange Commission wants investors to be aware of the potential risks that Bitcoin futures are associated with. The statement further stressed that these trading tools and programs are not yet regulated, giving room for potential fraud and manipulation.
SEC Releases Multiple Warnings for Potential Bitcoin Investors
Within this period, several institutional bodies are making giant leaps to incorporate Bitcoin and cryptocurrency. With each increasing development, the SEC has always given out a warning to investors about the risks that lie ahead.
Several institutions are currently applying to SEC for the approval of Bitcoin and Ethereum ETFs. The US regulatory authority has been hanging the approvals while urging investors to be cautious. Another statement related to Bitcoin ETFs was released by the SEC last month and its firm opinion of Bitcoin traded funds was once again expressed.
The statement reiterated the Investment Company Act of 1940. The law required that companies provide investor protections and Bitcoin futures were no exception. However, the regulatory body says that Bitcoin-related funds are characterized by much higher risks when compared to other funds.