This morning, two exchange-traded funds (ETFs) launched: Reality Shares NexGen Economy ETF (BLCN) and Amplify Transformational Data Sharing ETF (BLOK). Both firms plan to invest in companies working on the cutting edge of blockchain technology.
However, the term "blockchain" is notably absent from the ETFs' names.
This conspicuous omission is not the result of a poor marketing strategy. In fact, it's quite the opposite. Originally, BLCN was set to launch as Reality Shares Nasdaq Blockchain Economy ETF and BLOK as Amplify Blockchain Leaders ETF.
But, the Securities and Exchange Commission stepped in to request that the firms remove the word "blockchain," lest investor mania spill over into these new financial products.
"You can understand the SEC's point of view," said Reality Shares' CEO Eric Ervin. "There are a lot of retail mom-and-pop investors buying anything blockchain without really understanding what's in it."
"We've seen this phenomenon that has pushed up valuations of companies that put blockchain in their name or announce … blockchain ETFs," Amplify CEO Christian Magoon stated.
ETHNews previously reported on this phenomenon, which swept up companies like Riot Blockchain (previously: Bioptix) and UBI Blockchain Internet. Indeed, as blockchain and cryptocurrency fever has swept the nation, the US stock market regulator has been forced to step in with trading suspensions and freezes.
According to Magoon, the SEC also felt that the term "blockchain" might be misleading since many companies included in the ETFs do not derive a majority of their revenues from blockchain projects. As companies pivot toward blockchain strategies, it's important for investors and regulators to determine the legitimacy of their activities.
Last week, ETHNews reported on Eastman Kodak's questionable launch of KODAKOne, a blockchain-based platform that aims to assist photographers with the registration and licensing of their work, along with a token offering. It seemed like a sudden shift for a struggling company.