On 09 September, Reuters reported that the U.S. Securities and Exchange Commission (SEC) made an announcement it is stopping the trade of two investment products. The agency also reveals that there is a lingering confusion over the validity of these investment products as an Exchange Traded Funds ETFs. Therefore, it has to step in and suspend the trading of the influence products.
In addition, the commission explains that the application material submitted by the issuer of these products XBT Provider AB SE0010296574.ST calls them as Exchange traded funds ETF. Therefore, it seems that there is a lack of consistent information on the functions of these products.
SEC ETF Versus ETF Tracking
SEC has a history of not allowing ETFs tracking cryptocurrencies into the market. Therefore, many bitcoin ETFs have been declined by the commission in the past few years. One such case is the high profile rejection of the bitcoin ETF application submitted by the Winklevoss Twins in March 2017.
The company requests a reapplication for listing in 2018 with new documents stating that the crypto market cannot be manipulated. However, the application was rejected. The commission states that its analysis does not support the argument made by Winklevoss Twins.
In addition, the commission rejected a total of 9 ETF applications from three distinct sources. The applicants were Proshare, Graniteshare, and Direxion. Like its case with Winklevoss Twins, SEC mentions that the applications were not in accord with the requirements of Exchange Act Section 6(b)(5). The act requires that an ETF must submit a framework preventing the manipulation of its products.
As a result, investment firms have been pushing products that try to make the trading of cryptocurrencies look like regular stock. These firms dub these products ETFs which is a general name for strictly under regulatory products.
However, industry experts ask SEC to release standard terms differentiating ETFs from other types of investment products. One such demand was made by the largest ETF provider BlackRock Inc.