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SEC Places Temporary Trading Ban On 2 Crypto Investment Products

By

Nathan

Graham

WriterETHNews.com

The two investment products seem to need official classification before trading can commence.

Investors who use Bitcoin Tracker One and Ether Tracker One will have to wait a few days before they can commence trading.

According to an official announcement by the US Securities and Exchange Commission (SEC) released on September 9, the regulatory body has placed a temporary ban on trading in the two investment products because "there is a lack of current, consistent, and accurate information concerning Bitcoin Tracker One and Ether Tracker One."

The official announcement states that Bitcoin Tracker One and Ether Tracker One were described as "exchange traded funds" (ETFs) on the broker-dealer application materials required prior to availability in the US, as well as on "certain trading websites." Other "public sources" described them as "exchange traded notes" (ETNs). However, the issuer of these two investment products, XBT Provider AB, characterized them as "non-equity linked certificates" in sales materials.

An ETF is a type of fund where ownership of some underlying asset is divided into shares and sold as an investment. An investor can buy or sell these securities through a brokerage firm listed on a stock exchange. Investors can buy ETFs related to most asset classes, including traditional and alternative investments such as commodities or currencies. The advantages of this kind of security are that they have no minimum deposit requirements, you can short sell them, and they can be bought on margin. They're also relatively cheap compared to mutual funds.

ETNs are similar to ETFs in that investors are able to buy and sell them on a stock exchange. But whereas with ETFs returns are linked to assets such as stocks or commodities, the return on an ETN is linked to the market index and other benchmarks set by the issuing investment bank.

The definition of non-equity linked certificates is unclear.

According to the official announcement, the ban was implemented on September 9 at 5:30 p.m EDT and will be lifted at 11:59 p.m. EDT on September 20.

The official announcement did not mention whether the two investment products will be given an official classification during the temporary suspension, or what will happen once the ban is lifted, though SEC Commissioner Hester Peirce did hint at a possibility in a tweet Monday:

The SEC has been very active in the cryptocurrency ecosystem in recent months. In July, ETHNews reported that the SEC had delayed a decision to change a rule that would allow NYSE Arca to list and trade ETFs linked to the price of bitcoin. In August, it was reported that the regulating body was cautioning investors against putting their crypto in self-directed individual retirement accounts (IRAs). Days earlier, Commissioner Hester Peirce spoke out against the decision not to approve a bitcoin-backed ETF. 

Nathan Graham

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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