The United States financial market watchdog has forced two exchange-traded funds (ETFs) – Amplify and Reality Shares – to drop “blockchain” from their fund description, claims Bloomberg.
According to the April 12 report, two companies included the word blockchain on their name in the early filing with the Securities and Exchange Commission (SEC). However, in the last minute in 2018, both the funds were encouraged to drop the over-hyped word.
The agency enforced this under the Investment Company Act of 1940 which mandates the issues not to use “materially deceptive or misleading” names. With an amendment in 2011, the SEC has clarified the requirements of the nomenclature of the funds, according to which, the company should market themselves based on at least 80 percent of the underlying assets.
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After the SEC’s intervention Amplify describe its investment product as “transformational data sharing ETF” with the ticker name “BLOK”, while Reality Shares, going by “BLCN”, calls itself “Nasdaq NexGen economy ETF.”
Blockchain is not the only keyword targeted by the financial regulator as the publication claimed that the regulator has altered the names other funds themed to be other emerging technology specific – 5G, artificial intelligence, and electric cars.
The hype of the keyword
At the peak of the blockchain hype in 2017, Long Island Ice Tea, a New York-based beverage company, rebranded itself to Long Blockchain Corp. Though the company was not involved in any dealings with blockchain technology, the addition of mere the word “blockchain” had resulted in a massive surge in its share price. Withing days after the change of the name, the market capitalization of the company went up 500 percent. The suit was also followed by a few other companies before the SEC jumped into the rescue of deceived investors.
An anticipated investment instrument
Unlike Amplify and Reality Shares, many firms are trying to introduce a crypto-specific ETF on the US market. The SEC previously has rejected applications of multiple promoters pushing for Bitcoin ETFs. Currently two applications – one by CBOE and another backed by Bitwise – are pending with the financial regulator for approval.
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