U.S. financial regulator SEC has warned investors to be aware of the risks of digital currency futures in mutual funds in its latest investor warning over digital currencies. The SEC said investors should thoroughly weigh up the risks of investing in any mutual funds exposed to the BTC futures market, which it described as “highly speculative investment.” Bitcoin has witnessed a massive rally before plummeting this week.
SEC warns of BTC volatility and lack of regulation.
The SEC also noted that the volatility of BTC and BTC futures the financial regulator said the lack of regulation made the market a hotbed for fraud and manipulation, further complicating the risk picture for investors. Pointing to the need to consider the risk disclosures of any exposed funds fully, the SEC added that it was up to investors to focus on their risks. “As with any fund investment, investors should focus on the level of risk they are taking on, and the level of risk they are comfortable taking on, prior to making an investment,” the financial regulator noted.
The SEC would continue to monitor compliance at funds exposed to BTC futures.
The SEC notice picks up on the expansion of cryptocurrency futures markets since the first was launched for Segwit back in late 2017. These speculative investments now form an increasing share of some mutual funds targeting investors. The commission said it would continue to monitor compliance at funds exposed to cryptocurrency futures, in line with the Investment Company Act and federal securities laws. The SEC has also suggested it will give further consideration to whether the risks of cryptocurrency futures could be better accommodated through an ETF or exchange-traded fund.
