The U.S. Securities and Exchange Commission (SEC) has suspended trading in two Bitcoin and Ethereum investment products until September amid confusion over their nature.

Bitcoin Tracker One and Ether Tracker One are characterized by broker-dealers as exchange-traded funds (ETFs), which legally mean listed funds that track a basket of assets. However, the products’ issuer, XBTProvider, states the investment vehicles are “non-equity linked certificates”, the U.S. financial watchdog argued.

XBTProvider’s “Non-Equity Linked Certificates” Are No ETFs, US Regulator Says

The suspended securities, which are listed on the Stockholm stock exchange, operating under the name Nasdaq Stockholm, were issued by Swedish-based company XBTProvider AB, “the issuer of Bitcoin & Ether Exchange Traded Products” owned by London-based investment firm CoinShares.

The alleged ETF products are designed to grant exposure to the price performance of each cryptocurrency, with fewer fees.

The SEC stated a number of inconsistencies and inaccuracies in the information pertaining to the investment products.

“For example, the broker-dealer application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as “Exchange Traded Funds.” Other public sources characterize the instruments as “Exchange Traded Notes.” By contrast, the issuer characterizes them in its offering materials as “non-equity linked certificates.””

The statement was signed by SEC Secretary Brent J. Fields. It added that during the trading suspension, from September 9 to September 20, 2018, broker-dealers are authorized to assist non-broker-dealer customers with the liquidation of owned positions.

These are those held as of the date of this order in a transaction (or series of transactions ending with a sale) effected on the Nasdaq Nordic or other trading platform located outside the United States or with non-U.S. persons located outside the United States including the issuer.

The U.S. regulator has adopted a very strict approach to cryptocurrency-related exchange-traded funds. SEC has recently rejected a total of nine Bitcoin ETF applications from three different applicants: ProShares, Direxion, and GraniteShares. The financial watchdog argued the ETFs suffered from inadequate resistance to price manipulation in an insufficiently sized BTC derivatives market.

The Winklevoss twins have also failed to convince the SEC to approve their proposed Bitcoin ETF for the second time in late July.

The regulator disagreed with the Gemini founders’ argument that Bitcoin markets were “uniquely resistant to manipulation.” Along with this concern, issues of fraud and investor protection were raised. Tyler and Cameron Winklevoss may be attempting to go around the SEC by proposing to the U.S. government to create a Virtual Commodity Association to regulate the virtual currency industry.

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