SEC Suspends Trading in Cryptocurency-Based Securities Due to Confusion Over What Exactly They Are

By:
Chris Gaetano
Published Date:
Sep 10, 2018
SECURITIES-AND-EXCHANGE-COMMISSION-facebook

The Securities and Exchange Commission has suspended trading in two cryptocurrency-based securities investments, saying that different sources within the company classify them as different things, resulting in confusion from market participants. The two financial products in question, Bitcoin Tracker One and Ether Tracker One, are offered by a Stockholm-based financial company  XBT Provider AB. The SEC said that, one set of marketing materials refers to the products as "exchange traded funds," tradable securities that track an index or basket of assets. Other public sources, however, characterize the instruments as "exchange traded notes," unsecured, unsubordinated debt securities based on the performance of a market index minus applicable fees, with no period coupon payments distributed and no principal protections. Meanwhile, the issuer characterizes them in its offering materials as "non-equity linked certificates," which the creators, in an interview, said are products that track the price performance of their respective cryptocurrencies while, at the same time, buying an equivalent amount to back the certificate. Given all this confusion, the SEC said that trading on the products is suspended between Sept. 9 and Sept. 20.  

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