US regulator halts trading in two cryptocurrency products

US regulator halts trading in two cryptocurrency products

Two cryptocurrency-related securities were temporarily suspended by the US Securities and Exchange Commission (SEC), the agency announced on Sunday (September 9).

CCN reported last month that the three-year-old Bitcoin Tracker One had entered the us market, providing investors with a sort of "consolation prize" since the SEC had not yet allowed a regulated domestic exchange to list an outright bitcoin ETF, and most analysts do not expect a true bitcoin ETF until at least 2019.

On the other hand, there are the ETNs which the SEC defines as unsecured debt obligations of companies that trade on securities exchanges.

Instead, these two securities were non-equity linked certificates traded on the Nasdaq/OMX exchange in Stockholm, Sweden.

Also referred to as CXBF and CETHF, Bitcoin and Ether trackers are simply instruments that traders use to enter the crypto market and track the price of cryptocurrencies with fewer fees.

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The SEC said in a statement that trading in Bitcoin Tracker One CXBTF.PQ CXBTF.PK and Ether Tracker One CETHF.PQ CETHF.PK would be halted in the United States until at least September 20, and added that there was "confusion" in the markets over whether the products were exchange-traded funds or not. The decision was taken in accordance with the Section 12 (k) of the Securities Exchange Act of 1934. Yet, because ETNs are structured investment products issued by a major bank, as opposed to an asset pool, they come with a lower level of risk. An investor can buy or sell these securities through a brokerage firm listed on a stock exchange.

Billed as a "soft opening" in press coverage by Bloomberg, the products were contrasted with more sophisticated exchange-traded fund (ETF) products which had recently been shot down by regulators, as being a more immediate way to access crypto exposure with dollars. The Commission said "ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN's investment objective".

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article. Bitcoin and ether are volatile assets and their prices (and the price of securities that are referenced to them) can move quickly, positively or negatively.

As the official order indicates, the SEC discovered inconsistent language describing the products, Bitcoin Tracker One and Ether Tracker One, by Stockholm-based XBT, a subsidiary of CoinShares Holdings.

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