Regulators in the US Issue Warnings on the Risks of Bitcoin Futures Trading

On Thursday, the US Securities and Exchange Commission's (SEC) Office of Investor Education and Advocacy (OIEA) and the Commodity Futures Trading Commission's (CFTC) Office of Customer Education and Outreach (OCEO) issued a caution to investors looking for Bitcoin futures funds.

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"Among other things, investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment," the regulatory bureaus commented. They also raised concerns about the volatility that Bitcoin brings to the cryptosphere, as well as the fact that it is visible on the Bitcoin futures markets.

They emphasized a lack of oversight as well as the market's "potential for fraud or manipulation". Investors are informed of the factors that they should pay attention to, explained the bulletin, such as risk tolerance, the fund's disclosure of its risks, potential loss of the investment and the difference in investment outcome.

The price rise of the cryptocurrency may not translate to a rise in the value of a fund that holds positions in Bitcoin futures contracts. Because the funds that trade commodity futures contracts may not have direct exposure to the underyling assets. Futures contract pricing may vary by delivery month and differ from the underlying commodity's spot price, according to SEC and CFTC.

Recently, SEC announced that it would engage with members of Congress and other regulatory agencies to develop strategies to protect cryptocurrency investors.