The U.S. SEC warns of risks in Bitcoin and Ethereum ETFs, labeling BTC and ETH as highly speculative investments

The U.S. Securities and Exchange Commission (SEC) Investor Education and Advocacy Office issued a notice on Monday, urging investors to consider the risks associated with Bitcoin and Ethereum exchange-traded products (ETPs), including exchange-traded funds (ETFs). The U.S. SEC pointed out that investors should understand that Bitcoin and Ethereum are highly speculative investments. This includes risk exposure obtained through ETPs. Investors should consider the volatility of Bitcoin and Ethereum prices. The U.S. SEC warned that spot Bitcoin and Ethereum ETPs face price fluctuations and risks of fraud in unregulated markets. The securities regulator emphasized, "Spot Bitcoin and Ethereum ETPs are not registered as investment companies under the 1940 Investment Company Act." Therefore, they lack protections for asset custody and valuation applicable to ETFs and mutual funds.