The US Securities and Exchange Commission (SEC) has suspended trading in crypto ETNs (exchange traded notes) from XBT Provider. The company has two products that launched just last month in the US: a bitcoin tracker and an Ethereum tracker. Last night’s tweet from the SEC was a surprise the market could have done without.
The SEC says there is “confusion” in the market about ETNs, with many thinking they are exactly the same as ETFs when they are not.
They are the same in that they can be bought and sold like shares on a exchange, but they are in fact unsecured debt securities. We mentioned yesterday that the products are available via most US brokers.
This shouldn’t matter in times or market “normality”, but at times of stress it could open an investor to counter party risk, although this is the same as faced by investors in synthetic ETFs that don’t hold the underlying asset directly. The suspension of trading in the ETNs is another reminder of the worries the SEC has about the immature sector.
The Securities and Exchange Commission announced the temporary suspension of trading in the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) commencing at 5:30 pm EDT Sept. 9, 2018 and terminating at 11:59 pm EDT Sept. 20, 2018. https://t.co/5z1vEYFBFB
— SEC_News (@SEC_News) September 9, 2018
The provider of the ETNs, XBT Provider, was bought by Global Advisors in 2016. Since then a new brand to house the crypto products was created called Coinshares, domiciled in Jersey, one of the UK channel islands.
either Coinshares or Global Advisors has commented on the suspension but are no doubt being instructed by the regulator to make absolutely clear what the crypto products are (there is also an Ethereum tracker) and what they aren’t.
While we are on the SEC, it is worth mentioning that Elad Roisman has just been appointed a commissioner and he is pro-crypto, as is fellow commissioner Hester Peirce.
CitiGroup is designing a Digital Asset Receipt based on the American Depository Receipt (ADR), according to Business Insider. This is how it works, according to BI’s anonymous source:
“The foreign stock is held by a bank, which then issues the depository receipt. In this case, the cryptocurrency is held by a custodian and the DAR is issued by Citigroup.”
ICOs are killing Ethereum
Priced at $6,332, bitcoin is languishing in bear country, down 1.12% but the story this morning continues to be all about ETH.
As we have been pointing out over the past couple of weeks, downward pressure has been building on the price, with initial coin offering (ICO) projects selling off their holdings to capture their fundraise value before ETH heads into double figures. That also has an adverse knock-on effect on the price of all the ERC-20-compliant tokens launched via ICOs on Ethereum.
Currently trading at $196, Ethereum has failed to hold above the psychologically important $200 level.
Market participants are wondering how it came to pass that ICOs could drive the cryptocurrency’s value higher and is now partly responsible for dragging it lower.
What could turn it around for ETH? A mega ICO. Vitalik Buterin thinks the days of 1,000% gains in crypto over and if you don’t believe him take a look at how the minnows of the crypto world are suffering.
Where are the dapps?
No, it’s not more ICOs that Ethereum needs – it’s decentralised apps that do more than raise money for scammy ICOs or breed cats a la CryptoKitties.
And beyond the crowd sales and dapps there is the problem of transaction fees (Gas) that have to be paid in ETH, which is also pressuring prices.
Then there’s the the delayed Casper upgrade that adds to the fear that ETH is not going to catch a break anytime soon.
It is not known what percentage of projects cashed in their ETH as soon as the token sale finished and how many hoarded. The token hoarders will have received a harsh lesson in whether crypto is a good store of value.
Those who converted their hoard to fiat way before we returned to the current prices, which were last seen in September, will be sitting pretty.
Crypto market cap has fallen to $196 billion, according to coinmarketcap.
With most alts down today, the prospect of an altcoin extinction event (with the Ethereum extinction within) is back on the table.
There is one notable gainer in the field today – Russian project Waves is a rare asset in the green, up 20% today to $2.33), and may inspire some panic selling lower down the crypto food chain.