US SEC suspends two crypto products trading, citing the confusion in the markets regarding the products as the key reason for its ruling. What are these two products?
10 September, AtoZ Markets – Earlier this Sunday, one of the key financial regulators in the US, the US Securities and Exchange Commision (SEC) has stated that it has moved to immediately suspend trading in two investment products that track cryptocurrencies.
US SEC Suspends Two Crypto Products Trading
As the SEC has suspended two investment products that track cryptocurrencies, the regulator has referred to the confusion in the markets as the key reason for its decision. The US SEC has noted that market participants were feeling confused about the fact whether the suspended products are the exchange-traded funds (ETFs).
The SEC has further stated in its notice that trading in Bitcoin Tracker One and Ether Tracker One would be temporarily stopped in the US until at least September 20. The products are designed to track the price of cryptocurrencies for lesser fees. They are listed on a Nasdaq Inc exchange in Stockholm. However, they are also traded “over the counter” in transactions that occur off exchanges within the US. The US SEC writes:
“It appears … that there is a lack of current, consistent and accurate information. 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.’”
The issuer of Bitcoin Tracker One and Ether Tracker One is the XBT Provider AB SE0010296574.ST and its parent company. As of the moment, there is no public commentary from these firms or from Nasdaq.
SEC ETF Stance
It appears that the US SEC has taken a strict position regarding allowing ETFs tracking Bitcoin and other cryptocurrencies enter the market. However, investment firms have been promoting other types of investments that aim to facilitate the trading of cryptocurrencies, making it as easy as trading of a regular stock.
Those products are called ETFs sometimes. Yet, the term usually refers to a different and more strictly regulated product. Some of the industry insiders have called for the global regulators to standardize the terms used to describe ETFs and other kinds of investment products.
Earlier this summer, the US Securities and Exchange Commission has made its decision regarding nine Bitcoin exchange-traded fund (ETF) applications from three different applicants.
As per the three different orders that have been published on the regulatory website, the SEC has moved to reject all nine applications. The decisions emerge on the day ahead of the expected deadline for the decision for ProShares’ ETF rule change proposal.
However, instead of making a single decision about ProShares’ proposals, the regulator has decided to reject other seven proposed ETFs as well. These are five proposals from Direxion and two proposals from GraniteShares.
As the reasoning for all three disapprovals, the SEC has stated the following:
“[T]he Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular, the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
Later on, the regulator stated it intends to review its decision.
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