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The staff of the U.S. Securities and Exchange Commission’s Division of Investment Management released guidance with respect to investment in bitcoin futures by companies registered under the Investment Company Act of 1940, as amended. The staff conveyed its limited view that mutual funds, and in certain cases closed-end funds (CEFs) registered under the 1940 Act, may invest in bitcoin futures, provided that such mutual funds and CEFs disclose appropriate strategies for, and all material risks inherent in, an investment in bitcoin futures. The staff encouraged CEFs, exchange-traded funds, and other types of 1940 Act-regulated funds that intend to invest in bitcoin futures to consult with the staff (prior to filing a registration statement) on how such funds intend on ensuring compliance with the 1940 Act, the rules thereunder, and the federal securities laws.

The staff announced that, in coordination with the staff from the SEC’s Division of Examinations, it will closely monitor and assess such mutual funds’ and their investment advisers’ ongoing compliance with the 1940 Act, the rules thereunder, and the federal securities laws.


The guidance was issued more than three years after the staff issued a letter on prospective fund investments in cryptocurrency-related holdings, in which the staff raised questions with respect to registered funds’ investments in cryptocurrencies and cryptocurrency-related assets with respect to valuation, liquidity, custody, arbitrage mechanisms for ETFs, and potential manipulation and other risks. It is the first public statement by the staff regarding bitcoin and the bitcoin futures market under Chairman Gensler and shows the evolution of the staff’s positions on investments in bitcoin futures by registered investment companies. The staff’s statement regarding ETFs and CEFs suggests that it believes a cautious approach towards the use of bitcoin futures as a principal strategy is warranted, at least until the market develops further.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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Anthony Tu-Sekine | Partner

As the head of Seward & Kissel’s Blockchain and Cryptocurrency Group and a frequent commentator on all things crypto, Anthony advises clients on a wide range of evolving topics, including how to structure and issue security and utility tokens, registered and unregistered offerings of security tokenstoken custody, transfer and liquidity issues, non-security opinions, and investments in crypto assets by funds and other investors. A recognized leader on physical precious metals funds, Anthony represented APMEX Inc. and alternative asset manager Sprott Inc. in connection with the launch of OneGold.com, which allows investors to own gold documented on blockchain.

You can work with regulators or you can really try to piss them off… If you really want to do the latter, then you should expect that they will bring every tool they have against you.

Anthony’s thoughts on BitMEX indictment, as published in Law360 article “BitMEX Case Seen as Blessing in Disguise for Crypto Sector”