WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Fact Sheet, “SPACs + Crypto = Buyer Beware”:

“The financial industry wants to make it clear that SPACs are back. But investors should be extremely wary of their return. SPACs, or special purpose acquisition companies, are blank-check companies that raise money publicly for the purpose of merging with a yet-to-be-identified private company. In this way, companies can go public without making the disclosures required in a traditional initial public offering (IPO). This lack of disclosure means that investors are often left in the dark. During the last wave of SPAC IPOs in 2020 and 2021, SPAC sponsors earned huge fees, but investors suffered billions in losses.

“SPACs are just as risky now, and in fact may be even riskier. The SPACs think that they can ride the current wave of high crypto prices to high stock prices, as many SPACs are now seeking to merge with crypto treasury companies. However, crypto’s volatility means that the SPAC’s shares may plummet the next time there is a crypto crash.

“The SEC passed rules in 2024 that would have better protected investors from the risks that SPACs pose, but new SEC Chair Paul Atkins recently announced his intention to revisit those rules. Rolling back these rules could continue to imperil investors.” As it appears investors will be left to fend for themselves as SPACs return, they should understand why investors suffered harm last time and why SPACs may be even riskier now.

• SPAC sponsors make money even if investors lose

• SPACS are not subject to the same regulatory regime as traditional IPOs

• Crypto’s volatility means that SPACs that merge with crypto treasury companies are subject to all of the risks that come with owning crypto

The fact sheet is available online here.

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.