Shortly before listing, the U.S. Securities and Exchange Commission suggested that Amplify Investments and Reality Shares Inc., the firms behind them, drop “blockchain” from their names.
Smplify Investments LLC and Reality Shares Inc are each launching exchange-traded funds (ETFs) that invest in companies betting on blockchain, the decentralized technology bitcoin uses to keep a running record of transactions. That’s why the first exchange-traded funds to track companies involved in the digital technology that underpins cryptocurrency transactions are launching under new monikers: the Amplify Transformational Data Sharing ETF, ticker BLOK, and the Reality Shares Nasdaq NexGen Economy ETF, symbol BLCN.
However, the U.S. Securities and Exchange Commission (SEC) insisted the ETFs not include the word blockchain in their names if the stocks they hold do not directly collect a significant portion of their revenue from the technology, according to people familiar with the matter. Bloomberg News first reported the SEC’s discussions with companies over their funds’ proposed names.
The regulator may have been keen to avoid a repeat of recent incidents, like when beverage company Long Island Iced Tea Corp. changed its name to Long Blockchain Corp. and saw its stock price almost triple in a day.
The Reality Shares fund’s backers have said that buying companies that use blockchain to cut costs or start new business lines is a more conservative approach to investing than buying bitcoin directly because those companies are dependent on more factors than just that technology succeeding.
Reality Shares and Amplify hold companies involved in the technology including Germany’s SAP SE and Japan’s Hitachi Ltd. While Amplify’s fund is actively managed, the Reality Shares fund tracks an index of companies “that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology,” according to a regulatory filing.
As for Amplify’s BLOK, it will track companies like Citigroup, Nvidia, IBM, Square, and Overstock among others. Even though some of these firms are not directly involved with blockchain technology, all of them have an interest in supporting the technology’s application.