On the eve of the expected approval of Bitcoin Spot ETFs by the US Securities and Exchange Commission (SEC), Chairman Gary Gensler issued a stark warning about the risks of investing in cryptocurrencies.
In his detailed statement, Gensler underlined many important points that potential investors should consider.
In his article, Gensler touched upon the following points regarding the risks of cryptocurrencies:
- Compliance with Laws: Gensler cautioned that entities offering cryptoasset investments or services may not comply with applicable laws, including federal securities laws. He said investors in cryptocurrencies, which he described as cryptoasset securities, should understand that they may be deprived of important information and other important protections in connection with their investments.
- Volatility and Risk: The SEC chairman mentioned that investments in crypto assets can be extremely risky and are often volatile. Noting that a group of major platforms and crypto assets have gone bankrupt and/or lost value, Gensler claimed that investments in crypto assets continue to be subject to significant risks.
- Scam Potential: Gensler also warned that scammers continue to take advantage of the growing popularity of crypto assets to lure individual investors into scams. He cited fake coin offerings, Ponzi and pyramid schemes, and examples of a project backer disappearing with investors' money as examples of the types of fraud common in the industry.
Gary Gensler's statements come ahead of Wednesday, the last day of applications for the Bitcoin Spot ETF, which could open the doors to Bitcoin for many traditional financial investors in the US and is considered certain to be approved by many analysts.
*This is not investment advice.