U.S. SEC Suspended Two Cryptocurrency ETNs’ Operations

3 min read

On 9 September 2018, the U.S. Securities and Exchange Commission (SEC) shocked the crypto community after revealing that trading operations of Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) are suspended till 03:59 (EDT) on 21 September 2018.

The activities provided by crypto exchange-traded notes (ETNs) “Bitcoin Tracker One” and “Ether Tracker One” are suspended till 03:59 (EDT) on 21 September 2018, reported the US SEC on Twitter:

The attached link in the Twitter post sends users to a PDF file showing the notice No. 84063 released by the SEC.

According to the SEC, these are the terms of the order:

“The Securities and Exchange Commission (“Commission”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in 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.”

Regarding the reason behind the suspension:

“The Commission temporarily suspended trading in the securities CXBTF and CETHF because of confusion amongst market participants regarding these instruments.”

The “confusion amongst market participants” refers to the fact that SEC might think that these two services are similar to ETFs – which they actually are not.

In a previously published order, the SEC pointed out:

“It appears to the Securities and Exchange Commission (SEC) that there is a lack of current, consistent and accurate information concerning Bitcoin Tracker One (Ticker Symbol: CXBTF) and Ether Tracker One (Ticker Symbol: CETHF), issued by XBT Provider AB (publ), a Swedish company headquartered in Stockholm, resulting in confusion amongst market participants regarding these financial instruments.”

“For example, 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.” 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.” CXBTF and CETHF are listed and trade on the NASDAQ/OMX in Stockholm and have recently been quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc.”

“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.”

Gabor Gurbacs, Director of Digital Assets Strategy at VanEck/MVIS, shared this with his Twitter followers:

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