US SEC Warns Against Investment in BTC Futures Market

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In Brief
  • The Division of Investment Management Staff has warned against BTC futures.

  • The bitcoin futures market is reportedly highly speculative.

  • The commission have concerns about market volatility.

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The U.S. Securities and Exchange Commission (SEC) warns against investment in the bitcoin (BTC) futures market and BTC in general in a statement, on May 11.

On May 11, the Commission released a statement asking users in the BTC futures market to be aware of the dangers of investing in a volatile market and that users should be aware of their exposure. The SEC stated:

” […] investors should understand that bitcoin, including gaining exposure through the bitcoin futures market, is a highly speculative investment. As such, 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.”

An area of concern

The Commission said that when it first looked at the futures, they were still in an infancy stage but have become an area of concern as the market has developed.

“The Cryptocurrency Holdings Letter acknowledged that the bitcoin futures market, at that time, was in a nascent state with limited trading volume. The bitcoin futures market has developed since then, with increased trading volumes and open-interest positions,” the statement further explained.

The Commission says it is watching the activity around transactions such as these, because its representatives are concerned about uncertainty in the market.

“IM staff will be transparent about its approach to registered funds’ investment in the bitcoin futures market, as well as other types of cryptocurrency and digital asset investing. Such transparency will be designed to avoid market uncertainty and promote a level playing field for funds, consistent with the protection of investors,” it said.

Activity in the futures market

This statement from the Division of Investment Management Staff could have come after some activity in the futures market with Chicago Mercantile Exchange Group (CME Group), one of the world’s leading derivatives exchanges, announcing the launch of Micro Bitcoin, the latest in a suite of offerings within the crypto derivatives asset class.

Roughly one tenth the size of one bitcoin, Micro Bitcoin futures is expected to “provide an efficient, cost-effective way for a broad array of market participants – from institutions to sophisticated, active traders – to fine-tune their bitcoin exposure and enhance their trading strategies,” according to Tim McCourt, CME Group’s global head of equity index and alternative investment products.

Also, on May 11, SEC Chairman Gary Gensler told Congress that the crypto market needs more investor protection, likely dampening hopes of a bitcoin exchange-traded fund (ETF) being approved anytime soon.


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After studying journalism at Rhodes University, Nicholas worked as a financial reporter and analyst, covering a broad range of topics from logistics, to renewable energy, to ICT. Nicholas became fascinated with the ever-evolving world of technology. He is now a crypto asset journalist.

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