SEC Suspends Exchange-Traded Vehicles by CoinShare Holdings for Bitcoin and Ethereum

The SEC cited the reason of its interim suspension stating that the funds create a “confusion amongst market participants.”

Photo: Crypto News Daily / Flickr

Photo: Crypto News Daily / Flickr

The U.S. securities watchdog – Securities and Exchange Commission (SEC) – has shunned down yet another investment vehicle in the crypto space. In a major setback for cryptocurrency investors, the SEC announced suspensions of two funds – Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”).

A Sweden-based subsidiary of CoinShares Holdings, called  XBT Provider AB issued these two funds. In the official order, the SEC provides the reason of suspension stating a “confusion amongst market participants” in the United States. Note that it is an interim suspension which will come into effect from 5:30 p.m. EDT, September 9, till 11:59 p.m. EDT, September 20.

The official order notes that trading on other non-U.S crypto exchanges shall not be interrupted during the suspension period. The release reads:

“The broker-dealer application materials submitted to enable the offer and sale of these financial products in the U.S., as well as certain trading websites, characterize them as ‘Exchange Traded Funds.’ Other public sources characterize the instruments as ‘Exchange Traded Notes.’ By contrast, the issuer characterizes them in its offering materials as ‘non-equity linked certificates.'”

Funds Launched For U.S. Investors In August 2018

The SEC calls this decision to be in the “public interest” with the purpose of ensuring “protection of investors.” These two funds have been trading on the Nasdaq Stockholm exchange since last three years. U.S. investors got the opportunity to invest in these funds for the first time last month, after their launch in the U.S market.

Ryan Radloff, the chief executive officer of CoinShares Holdings Ltd., the parent of the company that offers the ETN, then said:

“Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona.” Continuing, he said, “Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

Bloomberg publication deemed this as a “soft opening” of the public markets cryptocurrency trading. The publication noted that these funds against the more sophisticated exchange-traded-funds (ETFs). These funds provide an immediate way to investors to get the cryptocurrency exposure to U.S dollars.

The Cryptocurrency ETF War With SEC

Cryptocurrency ETFs remain as one of the most awaited products in the crypto market. There are high expectations of better institutional participation in the crypto space with the launch of cryptocurrency ETF. Several proposals for Bitcoin ETFs have been shunned down by the SEC so far citing reasons of high market volatility and risks.

Analysts say that there are fewer chances of the SEC approving the Bitcoin ETF product before 2019. The Bitcoin ETF proposal by CBOE exchange has stirred a lot of interest among crypto investors. But the SEC has also postponed its ruling to this month end, and is expected to be delayed further.

Although everyone looks quite optimistic about the arrival of Bitcoin ETF, Andreas Antonopoulos says they could prove to be detrimental in the long term. He believes that ETF products allow investors to hedge the crypto asset’s price without actually holding them. Thus in the long run, it can possibly affect the price of the digital currency.

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