January 19, 2018 / 3:21 AM / 7 months ago

U.S. SEC questions prospects of bitcoin ETFs

Jan 18 (Reuters) - The U.S. Securities and Exchange Commission (SEC) has questioned the prospects of bitcoin exchange-traded funds saying there are a significant number of investor protection issues about cryptocurrencies and related products that need to be examined.

The issues need to be addressed before sponsors begin offering these funds to retail investors, the SEC said in a letter on Thursday to two trade groups.

“We have asked sponsors that have registration statements filed for such products to withdraw them,” the SEC said.

The SEC said it has questions concerning how funds holding substantial amounts of cryptocurrencies and related products would satisfy the requirements of the 1940 Act and its rules.

Acknowledging criticism on transparency, valuation and underlying assets, the SEC questioned the ability of cryptocurrency funds to comply with federal regulations for product offerings issued by investment companies in the public market. (bit.ly/2DpXsaj)

The SEC raised doubts about the capacity of funds to arrive at a “fair value” for cryptocurrency-related products and questioned about steps required to be taken to assure sufficiently liquid assets to meet redemptions daily. (Reporting by Kanishka Singh; Editing by Gopakumar Warrier)

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