The U.S Securities and Exchange Commission is cracking down on products that could mislead investors that are eager to understand and gain exposure to Bitcoin- or its underlying technology.
So serious is the securities watchdog that it is now pressurizing fund providers that provide Blockchain-ETFs to remove the word ‘Blockchain’ from the fund name. The regulatory body has already asked two firms, namely amplify, and reality shares, to remove the word from their blockchain-focused ETFs.
The directive by the SEC came with a strong warning against misleading the public. Firms such as Asset manager now have to take heed of this warning or risk sanctions by the regulatory watchdog. Asset manager launched its fund last year with the aim of giving investors exposure to the blockchain market in China; a market that the firm’s CEO Eric Ervin described as “quickly becoming a global epicenter for blockchain innovation”.
Even though both Asset manager and Reality shares heeded the regulator’s directives and implemented the name change, the companies’ funds contained tickers that still in one way or the other referred to the nascent technology according to Bloomberg.
Reality shares’ fund currently trades under the ticker BLCN. The firm’s fund is described as a ‘Nasdaq NexGen Economy ETF”. Amplify’s fund on the other hand trades under the symbol BLOK, while its product is described as a “transformational data sharing ETF”. According to the SEC, those should come off too.
The SEC’s current naming directives towards blockchain ETFs looks like a follow up to the regulatory body’s 2011 Names Rule Amendment. The SEC implemented Rule 35d otherwise known as the ‘Names rule’ back in 2011, inorder to provide additional clarity to the guidelines of the investment company act; which stipulates that all funds must ensure that there is at least an 80% correlation between assets and their descriptions.
Last year saw the SEC warn against companies changing their names to take advantage of the crypto boom, through SEC Chairman Jay Clayton. Stern action was promised on any companies that attempted to breach the Names rule inorder to ride the crypto wave. The SEC chairman said back then;
“The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.”
It is likely that this latest SEC crackdown, will be seen as a slight on crypto and not a positive regulatory move that all Crypto enthusiasts want the SEC to embrace. The SEC as always though continues to hold its ground, in the name of doing the best it can to protect investors.
Image courtesy of Pexels
