(Bloomberg) -- You can call a blockchain ETF whatever you want -- just don’t call it “blockchain.”
Two exchange-traded funds that invest in companies involved in developing the digital technology that underpins cryptocurrency transactions are rushing to tweak their funds after the U.S. Securities and Exchange Commission encouraged them to remove the word “blockchain” from their names at the 11th hour, according to people familiar with the matter. The funds from Amplify Investments and Reality Shares Inc., which will hold tech companies such as Germany’s SAP SE and Japan’s Hitachi Ltd., were slated to start trading as soon as Wednesday.
The request is almost ironic, given that even the regulator’s Fort Worth, Texas, branch joked on Twitter this week that “we’re contemplating adding ‘Blockchain’ to our name so we’ll increase our followers by 70,000 percent.”
Interest in the technology has emerged as a powerful investing theme. For example, beverage company Long Island Iced Tea Corp. changed its name to Long Blockchain Corp. and saw its stock price almost triple in a day. And shares in Eastman Kodak Co. jumped 245 percent in two days after the imaging technology company said earlier this week that it was working on a blockchain-based service to pay photographers for their pictures.
Path To Market
Perhaps that piqued the regulator’s concern. The SEC’s had a busy week investigating cryptocurrencies, already derailing plans for a dozen bitcoin ETFs as it looks to protect investors. The agency’s worry there, however, stemmed from how to value volatile digital coins, people with knowledge of the matter said at the time. In this case, the concern seems to be more cosmetic.
After filing for SEC approval within 24 hours of each other in November, blueprints for both funds were due to become effective on Tuesday, paving the way for competing listings on Wednesday. That timing is now in jeopardy, and the SEC could still block the renamed funds. Ryan White, an SEC spokesman, declined to comment.
The planned ETFs were to be called Amplify Blockchain Leaders ETF and Reality Shares Nasdaq Blockchain Economy ETF.
While Amplify’s fund will be actively managed, the Reality Shares fund will track an index of companies “that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology,” according to a regulatory filing. About 60 percent of the index, which rebalances twice a year, is comprised of companies from the information technology sector, according to Reality Shares’s website. The index has advanced 5 percent this year.
©2018 Bloomberg L.P.