The U.S. Securities and Exchange Commission (SEC) issued an “Order of Suspension of Trading” for Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) issued by Swedish firm XBT Provider AB.
Bitcoin Tracker One, also known as ‘Soft’ Swedish Alternative to ETFs, has been obtainable since May 2015 quoted in Euros and Swedish Krona (SEK). Last month, as reported by ForkLog, it became available to the U.S. traders after being quoted in USD below the ticker CXBTF.
However, in its assertion on Sunday, September 9, the SEC attributes “a lack of current, consistent and accurate information” which ends up in “confusion amongst market participants” as the explanation for such a choice.
SEC Issues Order of Suspension of Trading in Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) https://t.co/5z1vEYFBFB
— SEC_News (@SEC_News) 9 September 2018
“The Securities and Exchange Commission (“Commission”) introduced the momentary suspension, pursuant to Section 12(okay) of the Securities Exchange Act of 1934 (the “Exchange Act”), of buying and selling within the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) commencing at 5:30 p.m. EDT on September 9, 2018, and terminating at 11:59 p.m. EDT on September 20, 2018,” the assertion reads
Noting that each devices are listed and traded on the Nasdaq/OMX in Stockholm and have lately been quoted on OTC Link operated by OTC Markets Group Inc., the SEC mentioned:
“The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above quoted company”.
The SEC proceeded to clarify the inconsistencies of how the 2 merchandise are categorized, elaborating:
“The broker-dealer application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as ‘Exchange Traded Funds (ETF)’”.
The company defines ETFs as registered funding firms that supply traders a strategy to pool their cash in a fund that invests in shares, bonds, or different belongings. In return, traders obtain an curiosity within the fund.
However, the company identified that “Other public sources characterize the devices as ‘Exchange Traded Notes (ETN)’.
” Unlike ETFs, these notes are unsecured debt obligations of monetary establishments that commerce on a securities trade. “ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN’s investment objective,” the Commission mentioned.
The SEC additionally insists that ETNs are sometimes confused with exchange-traded funds (ETFs).
“ETNs and ETFs are both traded on a securities exchange and can be bought and sold throughout the day, but there are important differences.”
To additional complicate the matter, the Commission famous that “the issuer characterizes them in its offering materials as ‘non-equity linked certificates’,” which XBT Provider says “are not principal protected” and “do not bear interest.”
Commenting on the SEC’s ruling, Gabor Gurbacs, Director of Digital Assets Strategy at VanEck/MVIS, wrote:
“I suspected that a foreign product in U.S. capital markets will hold up so long while U.S. ETFs are held up for market structure related reasons. That said, I think regulators should let products freely compete and let investors and brokerages decide what they want to buy/allow.”
He additionally expressed his shock that the Grayscale Bitcoin Investment Trust ( GBTC), which additionally affords publicity to Bitcoin, however has decrease liquidity and is costlier than CXBTF, will not be impacted by the Commission’s ruling:
It’s not clear to me (@EricBalchunas pointed this out) why the XBT product is impacted and GBTC isn’t. It’d be nice if regulators let the market freely resolve what to commerce… permit ETFs, ETNs, closed-end funds,and so on…Bitcoin is already broadly obtainable to traders of every kind!
— Gabor Gurbacs (@gaborgurbacs) 9 September 2018
In addition to Bitcoin Tracker One and Ether Tracker One, XBT Provider AB has two extra merchandise: Bitcoin Tracker Euro and Ether Tracker Euro.
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