Bitcoin latest: US regulators raise concerns over investment in crypto-currency products
Regulators in the US have become the latest to warn about the safety of bitcoin-like investments, saying that they want greater clarity before endorsing funds which invest substantially in cryptocurrencies and related assets.
Dalia Blass, a director of the US Securities and Exchange Commission’s division of investment management, wrote to two trade groups that represent fund managers on Thursday, calling for more clarity on how mutual funds and exchange-traded funds (ETFs) would be able to store, safeguard and price assets that are based on cryptocurrencies.
The letter raises concerns about the liquidity of such products and their ability to be redeemed at short notice.
“What steps would funds investing in crypto-currencies or crypto-currency-related products take to assure that they would have sufficiently liquid assets to meet redemptions daily?,” the letter asks.
It also raises questions around investors’ ability to understand all the risks related to bitcoin-style products.
“Would investors, including retail investors, have sufficient information to consider any cryptocurrency-related funds and to understand the risks?,” the letter asks.
Bitcoin’s value surged by well over 1,000 per cent last year but wild price fluctuations have unnerved regulators and other financial professionals. Nonetheless, many companies in the asset management industry are still attempting to capitalise on the growing popularity of cryptocurrencies, like bitcoin, by trying to launch ETFs and other funds based on the products.
Earlier this month, South Korea announced it may ban domestic cryptocurrency exchanges, citing the risks associated with speculation. That sent the value of bitcoin tumbling to around $10,000 having hit a high of around $20,000 late last year.
Regulators in other countries, including Germany, have also raised concerns.
