US SEC tells you: Invest in ETFs holding BTC futures contracts, please pay attention to these

Recently, big news about cryptocurrency is constantly fermenting, and there are rumors that the US SEC will adopt Bitcoin futures ETF.

According to Bloomberg News, people familiar with the matter revealed that the US SEC is preparing to allow the first Bitcoin futures ETF in the US to trade. People familiar with the matter said that US regulators are unlikely to prevent these products from starting trading next week. Unlike the Bitcoin ETF application previously rejected by regulators, the applications of ProShares and Invesco are based on the futures contract being submitted under mutual fund rules. The chairman of the SEC stated that mutual fund rules provide significant investor protection.

On October 15, 2021, the U.S. SEC specially posted an investor announcement on the Bitcoin futures trading fund on the SEC website in June this year, reminding investors to carefully weigh before investing in funds holding Bitcoin futures contracts. Potential risks and benefits.


Investors speculate that the US SEC’s release of such news at this point indicates that the Bitcoin futures ETF will be adopted. Affected by the recent intensive release of such news, on the morning of October 15, 2021, Beijing time, Bitcoin quickly exceeded $59,000.

The US SEC believes that the following aspects should be paid attention to when investing in Bitcoin futures ETFs:

The Office of Investor Education and Advocacy (OIEA) of the U.S. Securities and Exchange Commission (SEC) and the Office of Customer Education and Outreach (OCEO) of the Commodity Futures Trading Commission (CFTC) urge investors considering investing in the Bitcoin futures market to carefully weigh their investments Potential risks and benefits. In addition, investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. Therefore, investors should consider the volatility of Bitcoin and Bitcoin futures markets, as well as the lack of regulation and the possibility of fraud or manipulation in the Bitcoin market.

Bitcoin. Bitcoin is a digital asset, or an asset that relies on blockchain technology. Bitcoin is also called “virtual currency” or “cryptocurrency”.

The future of Bitcoin. Bitcoin futures contracts are standardized agreements for buying and selling a specific amount of Bitcoin at a specific price on a specific date in the future. In the United States, Bitcoin is a commodity, and commodity futures trading needs to be conducted on a futures exchange regulated by the CFTC.

Funds regulated by the Investment Company Act of 1940 and its rules (“funds”) must provide important investor protection. For example, funds must comply with legal requirements related to fund asset valuation and custody, and mutual funds and ETFs must comply with liquidity requirements. These protections apply to all holdings in the fund, including holdings in Bitcoin futures contracts. Some funds may participate in the trading of Bitcoin futures contracts as a way to gain exposure to Bitcoin. Investors should understand that positions in Bitcoin and Bitcoin futures contracts are highly speculative.

Investors considering investing in funds that buy or sell bitcoin futures should carefully consider:

Investor’s risk tolerance. Compared with the level of risk they are willing to take, investors should pay attention to the level of risk they take.

Risk disclosure of the fund. The fund must disclose the main risks of investing in the fund in its prospectus.

Potential loss of investment. All investments in funds involve the risk of financial loss. Due to the high volatility of Bitcoin and Bitcoin futures (meaning that prices can fluctuate significantly), positions in Bitcoin futures contracts may increase this risk. There is also the possibility of fraud and manipulation in the potential cash or “spot” bitcoin market.

Differences in investment results. The increase in the price of Bitcoin may not lead to a similar increase in the value of funds holding positions in Bitcoin futures contracts. This is partly because funds trading commodity futures contracts may not have direct contact with the underlying assets of the contract. The price of a futures contract may vary depending on the delivery month and is different from the spot price of the underlying commodity. Futures contracts also expire regularly, leading to volatility in portfolio risk, because expiring futures positions are usually transferred to new contracts. The value of a particular fund may be affected by this maintenance of futures contract exposure.

Compared with other funds, funds that buy and sell bitcoin futures may have unique characteristics and higher risks. It is very important to consider how any investment fits your overall investment plan before investing.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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