The U.S. SEC reportedly encouraged some funds to change their ETF descriptions.
The United States Securities and Exchange Commission (SEC) reportedly required two funds to eliminate the word “blockchain” from their monikers, Bloomberg writes April 12, citing sources familiar with the matter.
The exchange-traded funds (ETFs) of both Amplify and Reality Shares reportedly mentioned blockchain in early filings. Per Bloomberg’s unarmed interlocutors, the two funds were encouraged to change their names at the last minute in 2018.
Despite eliminating the word “blockchain,” the funds’ tickers still refer to the technology. Ampilfy’s funds are traded as BLOK, while the product is described as “transformational data sharing ETF.” Reality Shares are using the title BLCN, depicting its product as “Nasdaq NexGen economy ETF.”
Moreover, Bloomberg claims that there were other blockchain-related funds who eventually changed their names following the SEC’s request.
Per the Investment Company Act of 1940, issuers are obliged not to use “materially deceptive or misleading” names. In 2001, the SEC adopted the Names Rule (Rule 35d) to clarify the guidelines. The funds are therefore required to ensure that at least 80 percent of assets coincide with the description in their monikers.
According to Bloomberg, the SEC is on high alert due to the growing number of ETFs launched by funds that offer to invest in a wide range of projects and services. The number of assets in these funds has nearly tripled between 2014 and 2018, and more than 10% of new ETFs in 2018 targeted a particular theme, the media out states.
As Cointelegraph previously reported, in early 2018 the SEC had warned that U.S. companies who change their name to include the word “blockchain” would soon face increased scrutiny from the regulators.
SEC chairman Jay Clayton recently noted that the crypto industry will stay in the regulator’s focus in the nearest future. He believes that there is a path for the industry to compliance with the federal securities laws.
Earlier in April, the SEC released guidance on determining whether digital assets constitute investment contracts. The agency also stated a new initial coin offering token from startup TurnKey was not a security.