SEC Issues Interim Trading Suspension for Bitcoin and Ethereum Exchange-Traded-Notes (ETNs)
On Sunday, September 9, the U.S. Securities and Exchange Commission announced an interim suspension of two exchange-traded-notes (ETNs) - Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF).
The official Twitter handle of the SEC News tweeted: “The Securities and Exchange Commission announced the temporary suspension of trading in the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) commencing at 5:30 pm EDT Sept. 9, 2018 and terminating at 11:59 pm EDT Sept. 20, 2018.”
In the official release, the SEC reasoned its suspension saying it was due to “a lack of current, consistent and accurate information.” The SEC stated that some of the broker-dealer applications and trading sites identified ETNs as exchange-traded funds (ETFs). However, the issuer has characterized them as “non-equity linked certificates” as per the official offering.
The official release reads: "The broker-dealer application materials submitted to enable the offer and sale of these financial products in the U.S., as well as certain trading websites, characterize them as 'Exchange Traded Funds.' Other public sources characterize the instruments as 'Exchange Traded Notes.' By contrast, the issuer characterizes them in its offering materials as 'non-equity linked certificates.’”
The regulatory agency further added: “The Commission is of the opinion that the public interest and protection of investors require a suspension of trading in the securities of the above-quoted company.”
Both the exchange traded notes are issued by Swedish company XBT Provider AB, a subsidiary of U.K.-based Coinshares Holdings. These products were first launched on the Nasdaq Stockholm Exchange three year back in 2015, and are trading since then. Last month, these two products were launched in the U.S. Market giving public investors some exposure to digital currencies through the U.S. Dollar.
During the launch, Bloomberg said that it is a "soft opening" for public markets crypto trading. Ryan Radloff, the chief executive officer at CoinShares Holdings, was then quoted saying: “Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona.” Continuing, he said, “Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”
The SEC is seen having a strict vigilance on crypto-investment products and has shunned down several ETFs in the past. The SEC has cited several reasons for rejecting ETFs like low trading volumes, high volatility and risks for investors. The SEC thinks that the cryptocurrency market is yet not matured for dealing with ETF-like products.