US SEC Warns Against Investing in Bitcoin And Bitcoin Futures Market
The United States Securities and Exchange Commission (SEC) has warned the public against investing in the Bitcoin futures market and Bitcoin in totality.
The statement issued by the Commission on May 11 sent a blunt message to investors that have holdings in mutual funds and Bitcoin futures to beware of the highly “speculative” and volatile digital asset. The commission further highlighted that the market Bitcoin trades on is lightly regulated, urging investors to weigh their appetite for risk and examine the fund’s disclosures.
“… 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 lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market”
As reported by Bloomberg, the commission sent the message through the SEc’s Division of Investment Management stating, “Investor protection and assessing the ongoing compliance of these funds is the top priority for the staff.” the statement further expounded.
SEC Holds Suspicions of the Bitcoin Futures Market
SEC in the statement made it known that the futures market of the cryptocurrency is still in an infancy stage after looking at the innovation.
“The cryptocurrency Holdings Letter acknowledged that the bitcoin futures market, at that time, was in a nascent state with limited trading volume. The Bitcoin futures market has developed since then, with increased trading volumes and open interest positions”, the statement
The commission has affirmed that it has its eyes on the activities around the transactions in the market due to the concerns of its representatives about the irregularities in the market. The IM staff, according to the commission, will be transparent about its approach to registered funds’ investment in the Bitcoin futures market as well as other digital assets. SEC explains that such transparency would be structured to evade the uncertainty of the market and institute a level playing field for funds, consistent with the protection of investors.
“Investors in the Crypto Market Needs More Protection,” SEC Chairman Tells Congress
The Chairman of US Securities and Exchange Council Gary Gansler has told congress on May 11 that the crypto market requires the enforcement of more investor protection.
The statement is likely to weaken the aspirations of a Bitcoin exchange-traded fund (ETF) to be approved soon as Chicago Mercantile Exchange Group (CME Group) – a leading derivatives exchange declared the launch of micro Bitcoin futures in a bid to attract retail traders.
The proposed project is expected to provide an easier cost-effective way for a broad array of market participants. The project would range from institutions to hyperactive traders to “fine-tune” their exposure to Bitcoin and aid in the development of their trading strategies.
However, the statement from the Division of Investment Management Staff could likely have been made after the CME announcement was made, thereby throwing in the breaks on the anticipated project.
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