While the world is expecting Securities and Exchange Corporation (the SEC) to approve the first Bitcoin-based ETF, SEC in the recent press release has temporarily suspended trading of Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”). The suspension would be commencing at 5:30 p.m. EDT on September 9, 2018, and terminating at 11:59 p.m. EDT on September 20, 2018
Suspension due to confusion amongst market participants regarding these instruments
In 2015, Bitcoin Tracker One became the first bitcoin-based security available on a regulated exchange when it listed on NASDAQ/OMX in Stockholm. The certificates provide exposure to the performance of the digital currency bitcoin by a synthetically tracking performance of the price of bitcoin (BTC/USD) less a fee. As Ethereum started to grow, in 2017, Ether Tracker One was launched and became the first publicly traded, ether-based security available on a regulated exchange when it listed on NASDAQ in Stockholm. Like BTC Tracker One, the certificates provide exposure to the performance of the digital currency ether by a synthetically tracking performance of the price of ether (ETH/USD) less a fee.
After being continuously trading for almost 2 years, SEC suspended trading of these securities. the reason sighted by the SEC is the confusion amongst market participants regarding these instruments.
“The Commission temporarily suspended trading in the securities CXBTF and CETHF because of confusion amongst market participants regarding these instruments. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).”
“The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.”
Is SEC’s attempt to clear confusion a sign of Bitcoin ETF coming?
There are two things that can be sighted in the notice. One the reason behind the suspension and the periodicity of the suspension. The reason sighted in the notice for suspension of CXBTF and CXBTF is that there is confusion amongst market participants regarding these instruments. There is no further information regarding what and why the confusion is. To be noted here is these products have been in the market for almost 2 years and there hasn’t been any confusion till now. Also, the SEC is suspending these securities only for 11 days. Again, difficult to gauge what confusion would be sorted out in 11 days’ time and is a suspension required to clear confusion about a security. Well, a lot of questions are awaiting answers as this exercise could also be done to clear up ground for the Bitcoin ETF so that the traders and market participants don’t confuse themselves between Bitcoin ETF and the Tracker One securities.
Some days back SEC had confirmed of reviewing it rejections on a series of Bitcoin ETF rejections to the likes of Proshares, GraniteShares, and Direxion. Also, the Van Ack Solid X Bitcoin ETF application is still awaiting answers.
Well, the coming days should be able to give us an answer as to what the confusion was and why had SEC suspended trading of these Bitcoin and Ether based securities. But let’s keep our fingers crossed if it’s for Bitcoin ETF.
With things turning favorable, will SEC allow a BTC based ETF this time? Do let us know your views on the same.