SEC Halts Trading of Bitcoin and Ether Security Products Due to “Market Confusion”
The Securities and Exchange Commission (SEC) has temporarily suspended the trading of two cryptocurrency investment instruments due to “confusion expressed amongst market participants,” reported Reuters on September 9, 2018.
The identification and labeling of the investment instruments were a big problem as it was unclear whether the products were exchange-traded funds (ETFs). In the last months, the SEC has taken a tough stance when it comes to approving ETFs that track cryptocurrencies, rejecting over nine Bitcoin ETF proposals from some companies.
SEC Suspends Trading of Two Cryptocurrency Products
According to the official order, there is “a lack of current, consistent, and accurate information” when it comes to the Bitcoin Tracker One and Ether Trackers One exchange-traded notes. These trackers were issued by XBT Provider AB, a subsidiary from the UK company CoinShares Holdings. They are both listed on the Nasdaq exchange in Stockholm.
The SEC News Twitter page tweeted that the suspension of Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF), will commence at 5:30 pm EDT on Sunday, September 9, 2018, and will end at 11:59 pm EDT on September 20, 2018.
The order mentioned that the broker-dealer application materials submitted listed the sale of these financial investment instruments in the US as“exchange-traded funds.” However, popular and public sources noted that these instruments were “exchange-traded notes.”
The issuer, however, characterized them in the offering material as “non-equity linked certificates.” Due to the confusion, inconsistent, and inaccurate information, the SEC believes that it is in “the public interest” to suspend the trading of the Bitcoin Tracker One and Ether Tracker One to protect US investors in the market.
SEC Takes a Strict Stance Against ETFs Tracking Cryptos
When it comes to ETFs, the SEC has adopted a strict and harsh stance against any cryptocurrency-related ETF from entering the market. According to CNBC, the SEC rejected a second attempt from Cameron and Tyler Winklevoss, the founders of cryptocurrency exchange Gemini, to list the first Bitcoin ETF on the exchange.
Furthermore, in August 2018, the SEC also rejected nine applications for a Bitcoin ETF. Business Insider noted that the SEC believes that market manipulation and fraud are still high in the cryptocurrency industry and are the primary reasons behind their rejection. Furthermore, the inability of the applicants to stop forms of manipulation and fraudulent behavior would expose their investors and leave them at significant risk.