Cryptocurrrency hedge funds have shot up like mushrooms on fertile soil lately. All of these companies aim to provide convenient access to cryptocurrencies. It now seems the SEC will begin cracking down on these offerings as well. Nearly 100 hedge funds are currently under scrutiny, albeit no charges have been filed yet.
The Cryptocurrency hedge Fund Craze
It is safe to say most hedge funds are simply jumping on the cryptocurrency bandwagon .After a successful 2017, it became evident consumers and investors want access to these currencies. More specifically, they want to ride the waves of volatility without buying Bitcoin and altcoins directly. As such, a cryptocurrency hedge fund seems to check all of the right boxes in this regard.
Unfortunately, this new trend also attracts a lot of attention from regulators. The SEC is examining several dozen of these financial providers as we speak. It is not the same as the ongoing crackdown on ICOs, which is a completely separate initiative by the agency. Instead, they want to make sure all of the hedge funds adhere to strict guidelines. It is evident this news will create some friction sooner or later.
For now, it seems this new “probe’ is designed for examining specifically. No official charges have been filed against any of these companies as of right now. Moreover, the SEC seems intent on gathering as much information as possible. This is a brand new product to most people, yet its overwhelming popularity certainly raises some questions.
The Road Ahead
For now, nothing will change in the immediate future. The current plan is to launch this investigation in the next two months. According to sources, the main goal is to ensure fund managers bought the type of assets they are advertising to potential investors. Additionally, there are some concerns over the potential theft of such assets.
On the whole, this new move by the SEC is positive in general. Any probe into these offerings will bring more legitimacy to this market in general. The same applies to the ongoing investigation into initial coin offerings. It has become evident cryptocurrency will continue to attract a lot of attention all over the world. This nascent industry still raises a lot of questions and provides very few answers as of right now.
It seems not much will change for the hedge funds under investigation. That is, assuming the SEC doesn’t find anything specific to be worried about. It is how many investigations they will launch in the next two months. While up to hundred firms are on the radar, it is possible half or less will be investigated in the end. These routine inspections are a positive thing, all things considered.