The Bulletin described Bitcoin as a “digital asset, or an asset that relies on blockchain technology” and a Bitcoin futures contract as a “standardized agreement to buy or sell a specific quantity of Bitcoin at a specified price on a particular date in the future.” Bitcoin is viewed by the SEC and the CFTC as a commodity.
Some of these regulated funds offer trading of Bitcoin Futures contracts as a way for investors to gain exposure to Bitcoin.
Investors should be diligent in reviewing a fund prospectus document, particularly the Investment Objective, Strategies, and Risks sections.
A rise in Bitcoin prices may not result in a similar increase in the value of a fund holding positions in Bitcoin futures contracts.
Fund managers should be cautious and take adequate steps to ensure that the investing public has full and fair disclosure of all relevant risk factors to mitigate any shortcomings in the public’s ability to understand the risks and potential rewards of such an investment.
Richard brings his experience as a senior legal and compliance officer on Wall Street and in London to bear in advising clients on corporate, FinTech, securities, and regulatory issues.
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