Investors in the United States who wanted to invest in Bitcoin and Ethereum without buying the digital assets, had the option of buying Exchange Traded Notes (ETN) through XBT Provider AB. The latter company is a Swedish-based subsidiary of the U.K firm CoinShares Holdings.
The BTC and ETH based investment products were made available back in mid August but the SEC announced late Sunday, 9th September, that it was suspending trading of the ETNs.
The twitter announcement by the SEC stated the following:
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.
The chief reason for the suspension, as provided by the SEC, was that the new investment products were causing confusion amongst market participants. The authority also explained that there was lack of current, consistent and accurate information concerning the ETNs: Bitcoin Tracker One (Ticker Symbol: CXBTF) and Ether Tracker One (Ticker Symbol: CETHF).
Some broker dealers, as well as websites, had characterized them as ‘Exchange Traded Funds’ whereas some had called them ‘Exchange Traded Notes’. These definitions were in contrast with the issuer defining them as ‘non-equity linked certificates’.
The SEC would further state that:
The Commission temporarily suspended trading in the securities CXBTF and CETHF because of confusion amongst market participants regarding these instruments. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
SEC Simply Doing Its Job
The temporary suspension might come as a shock to many crypto enthusiasts, but the SEC is simply doing its job by protecting American investors. The ETNs based on BTC and ETH are regulated and initially offered in Sweden. Therefore, the SEC has within its rights to suspend trading in the investment products if there is confusion amongst American stakeholders as to what they really are.