SEC Again Warns Investors Against Bitcoin Futures Funds

The U.S. Securities and Exchange Commission (SEC) sent out a second note to investors urging to reevaluate bitcoin futures-focused funds.

AccessTimeIconJun 10, 2021 at 10:52 p.m. UTC
Updated Sep 14, 2021 at 1:09 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) reiterated the risks of investing in bitcoin futures-focused funds with a staff note on Thursday that underscores the uphill battle U.S. bitcoin exchange-traded funds (ETFs) face.

In an emailed investor bulletin obtained by CoinDesk, staffers “urge investors considering a fund with exposure to the bitcoin futures market to weigh carefully the potential risks and benefits of the investment,” the note said, warning investors that the cryptocurrency as an investment is “highly speculative.”

This is the second recent warning the SEC has sent out in regards to bitcoin’s risk. Last month, it sent out a note to investors highlighting that it may not be safe yet to support an exchange-traded fund under the Investment Advisers Act of 1940 because of Bitcoin’s volatility.

Most bitcoin ETF applications are filed under a different law, the Securities Act of 1933, due to differences in how these laws treat such applications. The SEC has long warned against filing bitcoin products under the 1940 Act.

This warning comes at a time when large traditional banks and investment funds increasingly announce their interest in cryptocurrencies, both personal and corporate. In March, investment bank Morgan Stanley started offering clients access to bitcoin funds and in May Wells Fargo announced it would introduce a cryptocurrency fund.

Just yesterday, CoinDesk reported that investment banker Ken Moelis started looking into the crypto space as a potential business opportunity.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.