Bitcoin ETF’s: Is it safe to invest in crypto assets? Know More!

Estimated read time 3 min read

Bitcoin ETF’S News: The U.S. Securities and Exchange Commission (SEC) has approved the launch of spot bitcoin ETFs in the United States. US SEC approved the listing and trading of several spot bitcoin exchange-traded product (ETP) shares on January 10, 2023. ETFs are SEC-registered investment businesses that allow investors to aggregate their capital in a fund that invests in stocks, bonds, or other assets such as Bitcoin. The majority of ETFs are managed professionally by SEC-registered financial advisers.

But, how safe are Bitcoin ETFs? The US Sec in its statement talks about the action it intends to take for investor protection.

First, sponsors of Bitcoin ETPs will be required to provide full, fair, and truthful disclosure about the products. Investors in any Bitcoin ETP that is listed and traded will benefit from the disclosure included in public registration statements and required periodic filings. While these disclosures are required, it is important to note that today’s action does not endorse the disclosed ETP arrangements, such as custody arrangements.

Second, these products will be listed and traded on registered national securities exchanges in the US. Such regulated exchanges are required to have rules designed to prevent fraud and manipulation, and US Sec will monitor them closely to ensure that they are enforcing those rules. Furthermore, the Commission will fully investigate any fraud or manipulation in the securities markets, including schemes that use social media platforms.

Such regulated exchanges also have rules designed to address certain conflicts of interest as well as to protect investors and the public interest.

Further, existing rules and standards of conduct will apply to the purchase and sale of the approved ETPs. This includes, for example, Regulation Best Interest when broker-dealers recommend ETPs to retail investors, as well as a fiduciary duty under the Investment Advisers Act for investment advisers. Today’s action does not approve or endorse crypto trading platforms or intermediaries, which, for the most part, are non-compliant with federal securities laws and often have conflicts of interest.

Third, Commission staff is separately completing the review of registration statements for 10 spot bitcoin ETPs simultaneously, which will help create a level playing field for issuers and promote fairness and competition, benefiting investors and the broader market.

US Sec also raises some pertinent use-cases of Bitcoin and makes its stand clear – “Though we’re merit neutral, I’d note that the underlying assets in the metals ETPs have consumer and industrial uses, while in contrast, bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”

Finally, US Sec has this to say about investing in Bitcoin – “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

Source: Financial Express

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