The United States financial market watchdog has forced two exchange-traded funds (ETFs) – Amplify and Reality Shares – to drop “blockchain” from their fund description, Bloomberg reported.
According to the April 12 report, two companies included the word blockchain in their name in the early filing with the Securities and Exchange Commission (SEC). However, both funds were encouraged to drop the over-hyped word.
The agency enforced this under the Investment Company Act of 1940, which mandates 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 describes 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. Bloomberg noted that the regulator had also altered the names of other funds that included buzzwords of emerging technologies such as 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. Although the company was not involved in any dealings with blockchain technology, the mere addition of the word “blockchain” resulted in a massive surge in its share price. Within days after the name change, the market capitalization of the company went up by 500 percent.
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 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.