SEC reissues digital asset ‘FOMO’ warning in anticipation of expected approval of spot Bitcoin ETFs

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The U.S. Securities and Exchange Commission (SEC) cautioned investors against the fear of missing out (FOMO) when it comes to digital assets in a move that seems to all but confirm
rumors of the imminent and much-anticipated approval of spot Bitcoin exchange-traded funds (ETFs).

In a January 6 post on X (formerly Twitter), the SEC’s Office of Investor Education warned retail investors of the risks associated with digital assets, including meme stocks, digital currencies, and nonfungible tokens (NFTs).

“We’ve all seen the increased interest in online investing and the explosion of digital assets and meme stocks… just because others around you might be buying into these kinds of opportunities, it doesn’t mean you have to. Not every investment opportunity is right for everyone. Resist temptation and remember our phrase, ‘NO GO to FOMO,'” said the SEC.

This is not the first appearance of the SEC’s “Say no go to FOMO” warning; it was debuted
amid the November 2021 digital asset and equities bull market, which saw BTC, ETH, and many other altcoins reach new all-time highs, then highlighted again in March 2022 as markets were calming down.

The regulator’s latest FOMO warning could be related to a recent digital asset bull market
that, largely, has been inspired by the hoped-for approval of the first U.S. spot BTC ETF. However, with a decision on the spot BTC ETF expected sometime before January 10, it seems unlikely, to the point of unrealistic, that the SEC’s apropos of nothing FOMO warning would not be in anticipation of a favorable decision for the new product.

A spot Bitcoin ETF has been in the cards for some time, with the SEC involved in a lengthy back-and-forth with investors, including Blackrock, Fidelity, VanEck, and Invesco, who
reportedly met with officials from the regulator before Christmas to iron out a few remaining roadblocks.

Celebrity endorsement concerns

As part of the recent FOMO warning, the SEC felt the need to particularly caution investors against being influenced by celebrities when it comes to the digital asset space.

“You may see your favorite athlete, entertainer or social media influencer promoting these kinds of investment opportunities,” said the SEC. “Although it’s tempting, never make a decision to invest based solely on their recommendation.”

This is not an entirely left-field warning from the regulator, as in recent years, there have been numerous examples of celebrities and athletes promoting digital assets, some of which have resulted in high-profile lawsuits from the SEC.

In October 2022, television personality and influencer Kim Kardashian was fined $1.26 million for failing to disclose the fact that she was being paid to endorse EthereumMax on Instagram, and in 2018, the SEC fined boxer Floyd Mayweather Jr and rapper DJ Khaled, a combined $600,000 for failing to disclose they were paid to endorse the Centra Tech digital currency project.

In both cases, the celebrities failed to comply with the SEC’s anti-touting rules, prohibiting the promotion of securities (section 17b of the Securities Act of 1933), without making it clear that it was a paid ‘advertisement.’

With a new and exciting investment product potentially on the horizon, in the form of spot Bitcoin ETFs, the SEC is clearly concerned that celebrities, athletes, and entertainers will again be dipping their expensively pedicured toes into the digital asset market and—whether directly or indirectly—influencing their followers to do the same.

Watch: SEC Commissioner Hester Peirce on Blockchain Policy Matters