Gensler Hints at Crypto Regulation

A recent speech from SEC Chairman Gary Gensler suggests regulation of digital assets is imminent. Gensler’s widely reported remarks lamented the lack of investor protections in the crypto sector, which at times he said resembles the “Wild West.”  Gensler remarked that the crypto asset class “is rife with fraud, scams, and abuse in certain applications” and that investors often are unable to obtain “rigorous, balanced, and complete information.” Gensler emphasized the need for regulators to address these issues while  recognizing the existence of investment vehicles that already provide exposure to crypto assets with some investor protections. Gensler said he expected more of these products to emerge. “I anticipate that there will be filings with regard to exchange-traded funds (ETFs) under the Investment Company Act (’40 Act). When combined with the other federal securities laws, the ’40 Act provides significant investor protections.” Gensler seemed to encourage more of these products. “Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded bitcoin futures.”  Meanwhile, Barron’s reports that the first mutual fund tracking Bitcoin prices has begun operations. The Bitcoin Strategy ProFund launched recently with a minimum investment of $1,000. The fund invests in front-month futures contracts on the Chicago Mercantile Exchange.