On 9 September, the Commission on securities and exchange Commission (SEC) of the United States ordered the Swedish company XBT Provider to suspend trading in two cryptocurrency investment products: Bitcoin Tracker Tracker One, and Ether One.
According to the staff of the SEC, the company does not provide investors with reliable information about their cryptocurrency product that as a result leads to confusion in the market. According to the decision of the Commission, the trade will be stopped till September 20, 2018.
Members of the SEC stated that in the application the XBT Provider to receive a brokerage license provided that Bitcoin Tracker Tracker One, and Ether One are exchange-traded funds (ETF) and on its website, the firm XBT Provider calls them “certificates not tied to equity participation”. This corresponds to the definition of “Exchange-traded note” (ETN), not an ETF, so the company has put investors in confusion.
In essence, ETF and ETN is very similar: both financial instrument are securities, however, unlike ETFs, an ETN are unsecured debt obligations of financial institutions, the terms and conditions of payment of yield on the exchange notes depends on a certain index that represents the investment objective of the ETN.
XBT Provider will be able to resume trading after the change information for investors on its platform to match the characteristics of the ETF.