Why The SEC Suspending Bitcoin ETN Trading Doesn’t Matter

Published in

The Cryptoverse

5 min readSep 11, 2018

On Today’s Episode of The Cryptoverse…

While reading the cryptocurrency news headlines today, you may very well have seen claims to the effect of “SEC suspends Bitcoin and Ethereum investment vehicles.”

This is yet another video where I’ll attempt to calm your nerves by bringing razor sharp clarity to the situation by coloring it with specific details that make all the difference.

This one is really for Bitcoin investors, but as we know, what affects confidence in the crypto leaders, largely affects all crypto asset holders so I’m talking to everyone today.

Episode Transcript & Notes

… And speaking of investing in cryptos, today’s episode is brought to you by Weiss Cryptocurrency Ratings.

https://wcy.weissratings.com/s/5a815826fd0cc7bece4a1b505f5e873a/Weiss-Cryptocurrency-Ratings-20180830.pdf

As a subscriber myself, once per week I receive a simple PDF file that lists over 100 cryptocurrencies, each with a rating from A (strong buy) to E (strong sell)…

As well as a breakdown of how the grade was arrived at.

Not only do I find this service very valuable but more importantly I have gotten to know the leadership team at Weiss Ratings and believe them to be people of integrity.

If you sign up using my referral link you’ll not only get information that will help you with your investing decisions but you’ll also help keep this channel going.

Head over to www.thecryptoverse.show/cryptoratings for more info

So the first detail to know about this SEC suspension is:

(a) it is a fact for which can be verified by an official SEC document, and

(b) it is temporary.

The official document orders the suspension of trading from the 9th of September 2018 until the 20th of September 2018.

So those are the basic facts, meaning this is a real story verified by a primary source.

The next logical question is “why did they do this?”

“What is their reasoning?” and “what can we infer from their reasoning?”

To quote from the official document:

“It appears to the Securities and Exchange Commission (SEC) that there is a lack of current, consistent and accurate information concerning Bitcoin Tracker One (Ticker Symbol:CXBTF) and Ether Tracker One (Ticker Symbol: CETHF), issued by XBT Provider AB, a Swedish company headquartered in Stockholm, resulting in confusion amongst market participants regarding these financial instruments.”

When they say ‘confusion’ they mean that the product is labelled in 3 different ways.

In some places it’s labelled an “Exchange traded fund”, in others it’s labelled an “exchange traded note” and in other places it’s labelled “non-equity linked certificates.”

As a result, the SEC say:

“The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above quoted company.”

So having broken the situation down and examined the pieces myself, I don’t see this as a big deal.

More specifically, I don’t see this as an indication that the SEC is going sour on crypto oriented trading instruments. In fact this has little to do with crypto at all.

If any regular financial instrument where promoting itself in a way that the SEC deemed to be ‘confusing’ or ‘misleading’ by inconsistently calling it 3 different names, I believe they would react in exactly the same way.

“In the public interest and the protection of investors” as they put it.

Another detail I think it’s very important to point out is that this is a European financial product that was being bought by US investors.

While the SEC can’t stop the product being traded all together, they can stop US brokers from trading it and thereby block US citizens from investing in it.

This product was originally launched in 2015, but only became available to US investors in August of this year, and now it has been suspended from the US markets.

I have considered the possibility that the promoters of this product decided to tread a risky line by inferring that the product was an ETF, in order to appeal to the existing appetite for an ETF product, while technically being an ETN or exchange traded note.

I say that because “GBTC” which is the Grayscale Bitcoin Investment Trust is allowed to continue trading even though it has lower liquidity. I suspect the SEC left that alone because it’s much clearer what that product is in the eyes of the investor.

Just be aware that’s all conjecture on my part.

All eyes are on the 30th of September, which is the date the SEC imposed on itself to either approve or disapprove a change to their securities rules which would allow a Bitcoin Exchange Traded Fund to begin trading.

This is the SolidX ETF in collaboration with the CBOE.

This would be a US based financial product created by and listed by US companies.

I suspect the SEC will be far more comfortable with this since they have total power and jurisdiction over the parties involved.

So as long as those financial institutions don’t ‘confuse’ investors by being inconsistent with their language, they should be safe from the type of suspension we’ve been talking about today.

To my mind, the approval of the ETF on the 30th largely depends on whether the SEC believes that investors will be sufficiently protected from financial loss that may occur not from ‘confusion’ but from crypto market manipulation.

As we saw from the recent fake news about Goldman Sachs that made it around the world before it was debunked, the crypto markets are still very fragile to news shocks which is not going to give the SEC much confidence that ETF investors will be protected.

Remember though that all this talk of the Bitcoin ETF is exclusive to the United States. Yes what happens in the US affects crypto significantly, but the crypto world is far bigger than the US.

Thus I want to encourage investors in Bitcoin to broaden their view so that even if the Bitcoin ETF gets denied at the end of the month, you don’t take that to be the death of Bitcoin as a whole.

Whatever happens, everything I say in my videos is intended to be purely educational and not financial advice.

●▬ Recent Episodes From The Cryptoverse▬▬▬▬▬●