SEC Suspends Two Trading Products of XBT Provider

Trading activity for two XBT provider products has been suspended by the US Securities and Exchange Commission due to “a lack of current, consistent and accurate information” which creates “confusion amongst market participants.”

The two investment vehicles are Bitcoin Tracker one and Ether Tracker one. On September 9th, the SEC gave an “order of Suspension of trading” for two investment vehicles offered by XBT Provider AB, a Stockholm (sweden)-based company.

Further, regarding Bitcoin Tracker one (CXBTF) and Ether Tracker one (CETHF), the Commission mentions that “there is a lack of current, consistent and accurate information, ultimately resulting in misunderstanding amongst market players regarding these financial products.”

One product was developed to track the price of Bitcoin while another was created to monitor the price of Ethereum. Both investment vehicles are listed and traded on the NASDAQ-OMX exchange in Stockholm. Furthermore, both assets have recently been listed under the OTC Link, which is operated by OTC Markets Group Inc.

The Sec went on to say

“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.”

The agency stated that trading in two securities is “is suspended for the period from 5:30 p.m. EDT on September 9, 2018, through 11:59 p.m. EDT on September 20, 2018.” The decision was taken in accordance with the Section 12(k) of the Securities Exchange Act of 1934.

The SEC further explained how the two assets are grouped:

“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)’.”

The agency categorizes ETFs as listed investment vehicles which allow investors an option of pooling money. The fund invests the pooled money in assets such as bonds and shares. The investors are rewarded with an interest from the fund.

But, the agency opined that “Other public sources characterize the instruments as ‘Exchange Traded Notes (ETN)’.”

However, these notes are basically debt obligations of financial institutions. Furthermore, these insecure notes are traded on a securities exchange. The Commission said “ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN’s investment objective.”

“ETNs are often confused with exchange-traded funds (ETFs). ETNs and ETFs are both traded on a securities exchange and can be bought and sold throughout the day, but there are important differences.”

The Commission further clarified that “the issuer characterizes them in its offering materials as ‘non-equity linked certificates’.” The XBT Provider has also stated that the offerings “are not principal protected.” Furthermore, the investments “do not bear interest.”

The XBT Provider has two other similar tracking products apart from Bitcoin Tracker One and Ether Tracker One. They are Bitcoin Tracker Euro and Ether Tracker Euro.