The Securities and Exchange Commission (SEC) has suspended the trading of two cryptocurrency tracking products, the Bitcoin Tracker One and the Ether Tracker One, citing market confusion over whether they are exchange-traded funds (ETFs) as its reason. Both items are traded publicly on the Nasdaq in Stockholm, Sweden, and both will experience halted trading through September 20.
The SEC Is Always Watching
It seems that no matter what we do, the SEC is destined to have a hold on the cryptocurrency market. For the past several months, news has been stuffed with the dealings of the body’s officials. Whether it’s declaring both bitcoin and Ethereum non-securities, to repeatedly getting investors’ hopes up regarding bitcoin exchange traded funds (ETFs), the SEC and the crypto market appear to be joined at the hip. So long as crypto exists, the SEC will be there to oversee it.
Apparently, the problem surrounding both products stems from some investors and enthusiasts believing the products are ETFs. Both track the prices of said cryptocurrencies minus their fees, and trade “over the counter” in transactions that occur off exchanges within the U.S.
The SEC has released a statement, explaining:
“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 Commission believes that the public interest and the protection of investors require a suspension of trading in the securities of the above quoted company.”
Some History to Mull Over
Both bitcoin and Ethereum were classified as non-security entities back in May much to the relief of most investors. It was deemed that bitcoin was a commodity, and thus should be in the “hands and care” of the Commodity Futures Trading Commission (CFTC). Ethereum, on the other hand, initially started out as a pre-sale coin, but has since become so decentralized that it could not fall into the securities category.
The SEC has since overseen many applications for bitcoin ETFs and rejected virtually every single one, including a submission by the Winklevoss Twins of the Gemini Exchange in New York. However, the one application that still has everyone thinking there’s a chance is one submitted by VanEck SolidX.
The decision regarding whether to approve the application or not is set to be made on September 30 –just 20 days from now, given the organization doesn’t postpone things further. The application was the subject of much debate amongst SEC governors in that it was posted for public comment to see how investors would react.
Continuing Its Investigation
In addition, the SEC also garnered information and opinions from alleged “industry experts” regarding what the next maneuver should be. This is the furthest the SEC has gone with such an application, although it has certainly been a tough road for VanEck SolidX. This is their third time trying to get a submission approved, with the first two attempts being rejected almost instantaneously.
Where the SEC is really taking a stance is in initial coin offerings, or ICOs as they’re known. While Ethereum and bitcoin have been ruled non-securities, officials say that many other cryptocurrencies probably do fall into this spectrum thanks to their ICO backgrounds.
Hey, Hey! Ho, Ho! ICOs Have Got to Go!
Furthermore, the body has sought information and data from several institutions, firms, startups and corporate ventures that have somehow taken part in ICOs and similar cryptocurrency dealings. The SEC has deemed some of these events as “potentially unlawful” due to their alleged lack of registration(s) with the organization.
William Hinman – head of the Division of Corporate Finance for the SEC – has commented:
“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers.”