The Securities and Exchange Commission is conveying reservations about allowing for exchange-traded funds based on cryptocurrency, expressing scepticism that such funds would provide protection for \'mom and pop\' investors.

The SEC wrote a letter to Wall Street trade groups, who had made proposals for bitcoin funds, in which they explained that the volatility of cryptocurrency would not work with the need to create a market price that was fair for their daily portfolios. It would likely not allow for shares to be easily cashed out by those who had invested in them. As a result, Dalia Blass, who works as the director of investment management at the SEC, said that funding sponsors for such an endeavour would not be appropriate.

The SEC has also expressed scepticism on initial coin offerings, viewing them as securities sales that should have the proper regulations applied to them.

The SEC has received requests for crypto-based ETFs in the past, but rejected them, noting that the effective oversight could not be maintained due to the lack of transparency surrounding cryptocurrency and the market. Following on from the decision of two smaller American exchanges to allow for futures contracts based on bitcoin, many companies hoped the SEC would reconsider its stance. However, the Commodity Futures Trading Commission that regulates these contracts is a far smaller agency with more flexible regulations.