The U.S. Securities and Exchange Commission (SEC) has warned investors about the risks of Bitcoin futures trading. The financial regulator cited market volatility, a lack of regulation, and fraud to warn investors against the risk of the bitcoin futures market. U.S. SEC outlined key points that investors should “carefully consider” before investing in a fund that buys or sells Bitcoin futures.
“Bitcoin is a highly speculative investment.”
“Investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment,” SEC noted in a June 10 Investor Alerts bulletin. This latest Bitcoin-related risk warning from the financial regulator follows up on a note it sent out last month, warning investors “interested in investing in a mutual fund with exposure to the Bitcoin futures market” to think twice due to the risks. SEC noted that while investments in all types of funds involve risk, funds that “buy or sell Bitcoin futures may have unique characteristics and heightened risks compared” to others.
“Investors should consider the volatility of Bitcoin and lack of regulation.”
The U.S. SEC noted, “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.” The financial regulator also highlighted that Bitcoin’s price does not necessarily correlate with the value of the fund that holds Bitcoin futures positions. According to the SEC, this is in part due to the funds potentially not having direct exposure to the “underlying assets.” Earlier, U.S. Senator Elizabeth Warren lashed out on cryptocurrencies calling them “a bogus and lousy investment.”