On September 9, the US Securities and Exchange Commission (SEC) decided to suspend the trade in Bitcoin Tracker One (CXBTF) and Ether Tracker One (CTHF). According to the official report, the decision was made due to the "confusion among market participants regarding these instruments".
The announcement was made by the Twitter account @SEC_News where they informed the suspension of the Bitcoin Tracker One ETNs and Ether Tracker One.
It appears that the company did not explain the difference between ETN and Exchange Traded Funds (ETF). Some investors did not have the right information, something that pushed them to make bad decisions.
The SEC has informed the question:
"The Commission temporarily suspended the trading of CXBTF and CETHF securities due to the confusion among market participants with respect to such instruments.This order was entered pursuant to Section 12 (k (of the Securities Exchange Act of 1934 (Act on exchanges). "
An attorney for defense of the execution and litigation that works in Kobre Kim LLP, Jake Chervinsky, explained that the suspension of the SEC of these ETNs has no relation to the regulatory environment generally encrypted in the United States.
He said that the CXBTF and the CETHF failed to properly inform their ETNs. Some investors believed they were investing in ETFs, but instead they were putting their funds in ETN.
Chervinsky comments that the problem is related to both the CXBTF and the CETHF and not to Bitcoin (BTC) and Ether (ETH). Furthermore, the SEC states that there is a lack of up-to-date, consistent and accurate information on these products.
One of the main differences between ETN and ETF is related to ownership. When an investor enters the cryptocurrency market through an ETF, it is possible to receive the digital asset from the ETF provider.
ETNs are structured products issued as senior debt securities. Furthermore, ETNs do not have the same degree of security and assurance as ETFs.
For this reason, the SEC wanted to make sure that both products were differentiated from one another. In this way, investors would not be misinformed about the investment instruments they are using.