SEC Staff Issues Statement on Bitcoin Futures Thursday, May 13, 2021
On May 11, 2021, staff in the Division of Investment Management (IM) at the Securities and Exchange Commission issued a statement (the Statement) on “Funds Registered Under the Investment Company Act Investing in the Bitcoin Futures Market.” The Statement provides a series of warnings to retail investors about certain risks associated with investments in registered mutual funds whose portfolios include Bitcoin futures. But the Statement also provides further insight into the way SEC staff analyze the market for Bitcoin Futures more broadly.
The Statement indicates that IM staff, in coordination with SEC economists and the SEC’s Division of Examinations, will closely monitor the impact of mutual funds’ investments in Bitcoin futures on investor protection, capital formation, and the fairness and efficiency of markets. The SEC staff also noted that it intends to monitor and assess mutual funds�
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SEC Cautions Investors in Funds that Bet on Bitcoin Futures
The
Securities and Exchange Commission,
Division of Investment Management (IM) has issued a staff statement cautioning investors who purchase shares in mutual funds that have exposure to Bitcoin futures.
According to the Staff statement, investors should understand that Bitcoin is a highly speculative investment and investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.
Regarding open-end funds, IM staff believes that Bitcoin futures market should be pursued only by mutual funds with appropriate strategies that support this type of investment and full disclosure of material risks.
SEC Staff Statement On Funds Registered Under The Investment Company Act Investing In The Bitcoin Futures Market - Division Of Investment Management Staff Date
11/05/2021
The Division of Investment Management (“IM”) staff strongly encourages any investor interested in investing in a mutual fund with exposure to the Bitcoin futures market, as discussed below, to carefully consider the risk disclosure of the fund, the investor’s own risk tolerance, and the possibility, as with all investing, of investor loss.[1] Among other things, investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market. As with any fund investment, investors should focus on the level of risk they are taking on, and the leve