The United States Securities and Exchange Commission (SEC) required two funds to eradicate the word “blockchain” from their monikers; New York headquartered News Media Company Bloomberg reported on April 12, citing sources familiar with the facts.
According to the reports, the exchange-traded funds [ETFs] of both Amplify and Reality Shares noted blockchain in early filings. The two funds were motivated to change their names at the last minute in 2018, as per the Bloomberg’s unarmed interlocutors.
The funds tickers refer to technology despite eliminating the word “blockchain.” Ampilfy’s funds are bought and sold as BLOK, while the product is outlined as “transformational data sharing ETF.” Reality Shares are utilizing the title BLCN, representing its product as “Nasdaq NexGen economy ETF.”
Following SEC request, there were other blockchain related funds which eventually changed their names, according to Bloomberg.
In 2001, the SEC introduced the Names Rule (Rule 35d) to bring clarity to the guidelines. The funds are therefore required to ensure that at least 80 percent of assets should merge with the specification in their monikers. Per the Investment Company Act of 1940, issuers are obligated not to use “materially deceptive or misleading” names.
According to the reports from Bloomberg, the SEC is highly vigilant due to the increasing number of ETFs launched by funds that enable to invest in a wide range of projects and services.
Between the periods of 2014 to 2018, the number of assets in these funds has nearly tripled. In addition, more than 10% of new ETFs in 2018 targeted a specific theme, the media further added.
In early 2018 the SEC had issued a warning that U.S. firms who change their name to include the word “blockchain” would soon face increased inspection from the regulators.
Recently, Jay Clayton, SEC chairman highlighted that the crypto industry will be the main focus for the regulator in the nearest future. According to him, there is a path for the industry to follow the federal securities law compliance.
In April this year, the SEC announced guidance on evaluating whether digital assets comprise investment contracts.