In a statement issued on May 11, 2021 (Statement), the staff of the SEC’s Division of Investment Management (IM) addressed their concerns arising under the 1940 Act and the rules thereunder with funds investing in Bitcoin futures. The IM staff noted its understanding that certain mutual funds are investing or are seeking to invest in cash-settled Bitcoin futures that are traded on the Chicago Mercantile Exchange (Bitcoin futures). The IM staff conveyed its limited view that mutual funds, and in certain cases closed-end funds registered under the 1940 Act (CEFs), 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 IM 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 IM staff (prior to filing a registration statement) on how such funds intend to maintain compliance with the 1940 Act, the rules thereunder and the federal securities laws.
This S&K client memorandum discusses the Statement in more detail: https://www.sewkis.com/publications/sec-issues-statement-on-1940-act-registered-funds-investing-in-the-bitcoin-futures-market/
The Statement is available at: https://www.sec.gov/news/public-statement/staff-statement-investing-bitcoin-futures-market