The U.S. Securities and Exchange Commission (SEC) temporarily suspended trading of bitcoin and ethereum ETN’s by XBT Provider. The constraints will last until September 21 and limit Bitcoin Tracker One and Ether Tracker One stock exchange-traded notes (ETN). They were presented on the market by the Swiss division of a British company CoinShares Holdings. The message of the American regulator mentions "confusion" among the market participants regarding the nature of these instruments.
The Securities and Exchange Commission announced the temporary suspension of trading in the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) commencing at 5:30 pm EDT Sept. 9, 2018 and terminating at 11:59 pm EDT Sept. 20, 2018. https://t.co/5z1vEYFBFB
— SEC_News (@SEC_News) September 9, 2018
According to the SEC, some broker-dealers who applied for the opening of trading by cryptocurrency ETNs called them cryptocurrency ETFs. And the issuer himself calls the products "non-equity linked certificates." Under the securities law, the Commission can protect investors by suspending the trade of any security for no more than 10 working days. It is assumed that during this period, market participants will understand the situation.
Investors typically use the term "ETF" to mean a lot of things that aren't technically exchange-traded funds: commodity pools, grantor trusts, and debt securities. Exchange-traded notes are debt obligations of banks. Their cost is tied to the price of a certain asset, usually a basket of shares, bonds or commodity futures. The bank issuing exchange notes is not obliged to spend the money from investors to buy the assets that support the note's yield. Their only obligation is to pay off the money by the note's expiry date, returning the required amount to the investor.
Late in August, Fidelity Investments, an American holding company and financial services provider, gave customers an opportunity to purchase exchange notes (ETN) with bitcoin from XBT Provider.
Meanwhile, the market continues to wait for SEC decisions on bitcoin-ETF. In early August, the department postponed its decision to launch VanEck SolidX Bitcoin Trust from VanEck and SolidX until September 30. The commission can postpone the deadline further until the end of February 2019. Later it was announced that the SEC would reconsider its position on nine bitcoin-ETF applications (from ProShares, Direxion, and GraniteShares) that were also rejected.