The wait for trading a Bitcoin-based exchange-traded fund (ETF) has just become longer, as the US Securities and Exchange Commission has banned trading in the much-touted, alternative, overseas-listed products known as the Bitcoin Tracker One (CXBTF) and the Ether Tracker One (CETHF) (SEC).
Ambiguity around Product Classification and Concerns for Investor Protection
The US financial watchdog announced the suspension of trading activity for US investors in the two securities in an order issued on Sunday, September 9, 2018. The suspension will begin at 5:30 p.m. EDT on September 9 and will end at 11:59 p.m. EDT on September 20.
The agency notes that these foreign-listed securities are being characterized as ‘Exchange Traded Funds’ in “broker-dealer application materials submitted to enable the offer and sale of these financial products in the United States,” as ‘Exchange Traded Notes (ETN)’ in other public sources, and as ‘non-equity linked certificates’ by the issuer in its offering material. The SEC ruling goes on to declare that the decision was made for “investor protection” and in the “public interest.”
These instruments, issued by XBT Provider AB, a Swedish subsidiary of the U.K. business CoinShares Holdings, have been trading on the Nasdaq Stockholm market in Sweden in the native currencies of euro and Swedish krona since 2015. They began quoting in US dollars (USD) in mid-August of this year. (For further information, see Bitcoin Tracker One: The Bitcoin ETF Alternative.)
Ryan Radloff, CEO of CoinShares Holdings Ltd., the parent firm of the business issuing the ETN, had previously said, “Everyone investing in dollars may now receive exposure to these products, while they were previously exclusively accessible in euros or Swedish krona.” Given the present regulatory environment in the United States, this is a significant victory for Bitcoin.”
As the SEC has been rejecting various applications for Bitcoin-based ETFs in the United States for a long time — the most recent denial was in late August — the Bitcoin Tracker One and Ether Tracker One were seen as the legal alternative to crypto ETFs by U.S.-based cryptocurrency supporters. (For more, see SEC Rejects a New Wave of Bitcoin ETFs.)
The SEC’s suspension decision is being ascribed to the recent drop in bitcoin and ether prices over the weekend. As of this writing, Bitcoin is down around 1.4 percent, while Ethereum is down 4.34 percent in the previous 24 hours. According to CoinMarketCap.com, Bitcoin was trading at $6,332 during Monday AM ET hours, while Ethereum was trading at $195.75.
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and neither Investopedia nor the author suggest that you do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns no cryptocurrencies as of the day this post was published.
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