The SEC temporally suspended the trading of two cryptocurrency ETN-s in Sweden. The “Bitcoin Tracker One” and the “Ether Tracker One” can’t be sold to US investors until the 20th of September, but the prohibition leaves open the case when US investors want to exit this assets.
Not in the US
The issuer, XBT Provider made a Clarification, explaining that the suspension of the trading “of the securities Bitcoin Tracker One and Ether Tracker One relates only to trading in the Unites States, does not apply to trading on the listing market - Nasdaq Stockholm, and does not relate to any action taken or failed to be taken by XBT Provider AB”.
XBT Provider has not sought registration or trading of these securities in the U.S., but “broker-dealer” could do it. (Bloomberg.com wrote about it in August.)
No importations, please
What is happening? I think nothing surprising. The SEC denied the permission to issue, if I’m counting it right, nine different cryptocurrency-ETF’s in the last weeks. It is comprehensible that the supervisory organization doesn’t want to allow similar products on US stock market coming from abroad, either.
The Swedish notes are coming from a regulated market, the Nasdaq Nordic, in Stockholm. But are representing an even higher level of risk than the ETF’s. ETF’s – “Exchange Traded Funds” – “represent a stake in an underlying commodity” (Investopedia). It means, this funds are really buying the stock, commodity, cryptocurrency or other product they are following.
One more risk
The ETN’s are “structured products that are issued as senior debt notes”, are more like unsecured bonds. By ETN’s, you have to risk the bankruptcy of the issuer (“underwriter”), which means at least one risk more than by ETF’s.
That doesn’t mean you can’t buy ETN’s, there are a lot of ETN’s on US markets. For example, following the crude oil, other commodities, the VIX S&P 500 volatility index, Indian stock markets etc. (See a list here.)
No panic today
What are doing this ETN’s today in Europe? You can track them on Investing.com – Bitcoin, Investing.com – Ether, or on Nasdaq NSCX – Bitcoin , Nasdaq NSCX – Ether. Also on Bloomberg.com, here, and here.)
Are investors in panic today? No. The fair value of the products can be seen here, and it isn’t very different as today’s stock exchange prices of the notes. (There are also some products issued in Swedish Crowns /SEK/, I linked only the Euro nominated ones.)
The funds are relatively small, 150 Millions of Euros by the Bitcoin Tracker, and 37 Millions by the Ethereum Tracker. With a Bitcoin trading volume of 3,7 Billion USD in 24 hours, the market could afford the liquidation of this funds easily.
The one and only major worry is the negative attitude of the SEC. When and if it changes, I don’t know, but regulatory, supervisory and watchdog organisations, lawmakers are often late, running behind the new realities. Some European countries not even recognize the existence of cryptocurrencies.
I am not a financial advisor and this content in this article is not a financial or investment advice. It is for informative purposes only, or simply to make you think, entertain, increase testosterone and adrenaline level. Consult your advisers before making any decision.
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