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US SEC Suspends Trading in Two Cryptocurrency Products

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The US SEC has issued a ban on the trading of Ether Tracker One and Bitcoin Tracker One.

The agency cited “a lack of current, consistent and accurate information” as the reason behind the suspension. Consequently, this has the potential to create “confusion amongst market participants” the SEC said.

Order of Suspension for XBT Provider’s Products

In fact, the agency issued the “Order of Suspension of Trading” on September 9.

“There is a lack of current, consistent and accurate information,” they note.

As a result, suspension occurred because of “confusion amongst market participants regarding these financial instruments.  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.”

Therefore, in accordance with the Section 12(k) of the Securities Exchange Act of 1934, the SEC suspended the trading in these two securities.  This is “for the period from 5:30 p.m. EDT on September 9, 2018, through 11:59 p.m. EDT on September 20, 2018.”

Inconsistencies in Categorization

Unfortunately, there are inconsistencies in the categorization of the products.

The SEC notes, “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 (ETF)’.”

Furthermore, the SEC said, “Other public sources characterize the instruments as ‘Exchange Traded Notes (ETN)’.”

However, these notes, unlike the ETFs, are unsecured debt obligations of those financial institutions that are known to trade on a securities exchange. The SEC continues, “ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN’s investment objective.”



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