The US Securities and Exchange Commission (SEC) indicated at the beginning of September 2018 that it would stop trading in two investment products that monitored the popular bitcoin and ethereum digital tokens. The two products in question, the Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF) are the publicly traded notes (ETN) issued by XBT Provider AB, a Swedish company and a Coinshares Holdings subsidiary based in U.K. According to a CCN report, the SEC cited "a lack of current, consistent and accurate information" relating to the two ETNs as a critical reason for its order to stop trade.
For cryptocurrency investors in the US and abroad, this signals the SEC's latest move to intervene and regulate a decentralized industry. Tug of war between digital currencies, designed to be traded anonymously and without the execution of a central bank or distributor, and more traditional investment products, continues to be increasingly complex. What can investors expect to get out of this latest move by the US regulatory agency?
Latest in a history of SEC actions
One important thing to note is that the SEC's decision to ban Swedish ETNs from trade in the United States is not the first time that the agency has intervened to regulate the cryptocurrency space and adjacent investment areas. One of the most significant questions about digital currencies – regardless of whether they are counted as titles or not, which means they would fall within the scope of various securities laws that have existed for decades – was one of the first efforts made by the SEC to exercise control over the sector. After years of exchanges between regulators and community leaders of digital tokens, the SEC's latest position is that most digital tokens are not securities, but the first coin offerings (ICO), the popular crowdfunding method used to launch tokens and related blockchain products.
Another significant problem the SEC has faced is the fund traded in exchange with bitcoins or altcoins (ETFs). ETFs are among the most popular investment vehicles at the moment, and it was only a matter of time before the resourceful cryptocurrent leaders attempted to link an ETF to bitcoin or another popular digital currency. At the time of writing this document, the regulator did not approve any bitcoin-based ETF for launching in the United States. This has not prevented many developers from making more attempts, however, the enthusiasm and the optimism for the prospect of a bitcoin ETF remain high among the members of the cryptocurrency space
The Latest SEC Move
In an effort to halt the negotiation of CXBTF and CETHF, both listed on the Nasdaq stock exchange in Stockholm since 2015 and entering the US markets at the start of this year, the SEC explained that "the interest public and investor protection require a suspension of trade ". The regulatory authorities have elaborated explaining that "the materials of the applications of financial intermediaries presented to allow the offer and sale of these financial products in the United States … characterize them as" exchange-traded funds ", while" other Public sources characterize the tools as "Exchange Traded Notes." By contrast, the issuer characterizes them in its offer materials as "non-equity-related certificates".
It is important to note that the & # 39; The SEC's order was to stop the trade, not to completely remove these products.Apparently, the problem, in this case, is that the two products are difficult to characterize.However, the enthusiasts of the cryptocurrency could also interpret the move as an effort to ensure that the SEC maintains control over the possible admission (or not) of ETFs or ETNs related to the digital currency on the US market. ivel its postponed decision on the VanEck SolidX bitcoin ETF at the end of September, investors may have more information about whether the regulator is willing to allow these products in the US