SEC Shuts Down Two Bitcoin and Ether Securities, Calls Out 'Investor Confusion'

The U.S Securities and Exchange Commission halted two cryptocurrency-backed securities on Sunday following concerns of "Market confusion" among participants.

According to the SEC notice, XBT Provider's Bitcoin and Ether exchange-traded notes, Bitcoin Tracker One and Ether Tracker One will be suspended of trading until Sept. 20, due to concerns of "Confusion" among retail investors regarding crypto finance instruments.

The Securities and Exchange Commission announced the temporary suspension of trading in the securities Bitcoin Tracker One and Ether Tracker One commencing at 5:30 pm EDT Sept. 9, 2018 and terminating at 11:59 pm EDT Sept. 20, 2018.

Citing a lack of "Current, consistent and accurate information," the trading lockdown was issued with immediate effect.

According to the SEC, the broker-dealers submitted the product applications in the U.S. under the premise of an exchange-traded fund, despite the general populace believing the offering to be an ETN. The issuer classified the products as a "Non-equity linked certificate."

That said, the SEC called out the inconsistent, inaccurate and confusing information surrounding the XBT-issued crypto product.

With this, the watchdog stated it was in "Public interest" to temporarily cease trading of the two offerings.

"[T]he 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.

Presumably, the two products attracted the watchdog's attention after being identified and labeled comparable to an ETF, a commercial offering that is more structured and secured than an ETN. ETFs allow investors to place bets on a fund backed by the underlying asset's massive holdings, which are adjusted in portfolio value comparable to the asset's market performance.

The SEC has infamously taken a hard stand toward Bitcoin ETFs, with nine such applications rejected in August 2018 alone.