Daily Management Review

'Investor Protection Issues' Are Raised By Bitcoin Based Funds, Says U.S. SEC


01/19/2018




'Investor Protection Issues' Are Raised By Bitcoin Based Funds, Says U.S. SEC
While deliberating on the possibility of endorsement of more than a dozen proposed products that are based on cryptocurrencies, the Securities and Exchange Commission of the U.S. has sought clarification and answers from the fund industry about the concerns they had of these virtual coins, while also raising an alarm about the security and safety of investment that are related to bitcoin and similar virtual currencies.
 
A letter was sent by the U.S. SEC to two trade groups who represented fund managers who were keen on making detailed proposals for funds holding bitcoin or related assets. The letter was sent by a top division chief at the SEC and it had detailed explanations about the concerns and worries of the agency about cryptocurrencies and trading in them.
 
The method and mechanism of storing, safeguarding, and pricing of cryptocurrencies hat would be adopted by mutual funds or exchange-traded funds based on bitcoin, were the issues on which the SEC raised 31 questions – each one in detail, and asked the proposers to provide answers. The letter was sent by the SEC’s division of investment management.
 
How the concerns about the manipulation of the bitcoin market would be addressed and whether the investors understood the risks of such trading were also asked by the agency.
 
“There are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to investors,” said the letter signed by Dalia Blass, the SEC’s director of the division of investment management.
 
There has been demands from investors to products that are linked to bitcoin after the virtual currency showed an astounding 1,500 percent rise last year. And in order to open up bitcoin to the larger retail market, there are many companies that are attempting to launch exchange-traded funds in this category.
 
The owners of the Gemini bitcoin exchange - investors Cameron and Tyler Winklevoss, were denied permission in March last year by the SEC to an application to list an ETF.
 
Direct investment in bitcoin is being sought by the Winklevoss fund. On the other hand, a number of fund firms had raised their hopes after the launch of U.S.-listed bitcoin futures contracts late last year. This launch attempted to provide some sense of stability as a basis for the ETFs compared to the general y much larger but highly deregulated spot market dealing in the virtual currencies. Many of those proposals were withdrawn last week at the request of the SEC.
 
“The SEC statement is a “really big deal” by making public concerns that fund managers would have had to address on a case-by-case basis, behind the scenes,” said Jeremy Senderowicz, a lawyer who represented one proposal for a cryptocurrency product before the SEC.
 
“It shows that they’re going to have to take some time to consider the industry’s responses before they change their minds on it,” said Senderowicz, a partner at Dechert LLP.
 
“It gives a template for how to get to a yes.”
 
(Source:www.reuters.com)






Science & Technology

Analysts: Google Search is losing clicks

Microsoft admits wiretapping users

French Optic 2000 unveils smart glasses

You Can Wear Your New Air Conditioner With Your Clothes

Research: Anonymous data is not so anonymous anymore

Tech giants face stricter government regulation in the US

Nestle's Head: Veggie meat is new megatrend

Huawei may introduce Android replacement in August

Are US high-tech investors causing brain drain in Europe?

'Russia's Google' Yandex Was Hacked By Western Intelligence For Spying: Reuters

World Politics

World & Politics

European Social Democrats are losing ground

Hong Kong's richest citizen calls to stop violence and unrest in the city

UK railway operators exit Interrail system

Dozens of British Airways flights canceled or delayed due to computer malfunction

China keeps importing Iranian oil in spite of US sanctions

Marijuana legalization: Did Canada benefit from cannabis boom?

Republicans and Democrats focus on carbon pricing

Iran Hints It May Swap Seized Tankers With The UK