SEC Warns of Bitcoin Futures Risks in Mutual Fund Investments – Bloomberg

The U.S. Securities and Exchange Commission has a blunt message for investors in mutual funds that have holdings in Bitcoin futures: Beware of the risks.

While the derivatives have become increasingly popular, theyre still based on an asset thats highly speculative and volatile, and which trades in a lightly regulated market, the SECs division of investment management said Tuesday in a statement. Investors should weigh their appetite for risk and examine the funds disclosures, the agency said.

Investor protection and assessing the ongoing compliance of these funds is a top priority for the staff, the SEC said.

The warning comes just weeks after Gary Gensler, who taught classes on digital assets at the Massachusetts Institute of Technology, took over as SEC chairman. His early comments have thrown cold water on speculation that the SEC would quickly approve a Bitcoin exchange-traded fund. Last week, he told lawmakers that the cryptocurrency market could benefit from greater investor protection.

Read more: Bitcoin ETF Approval Odds Grow Longer After Gensler Critique

On Tuesday, the SEC said it would consider whether, in light of the experience of mutual funds investing in the Bitcoin futures market, the Bitcoin futures market could accommodate ETFs. The agency also said staff would:

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SEC Warns of Bitcoin Futures Risks in Mutual Fund Investments - Bloomberg