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Blockchain and cryptocurrencies have been expanding all over the world during the last few years. Not only digital assets have been released to the market, but also several financial investment instruments that allow users to have exposure to these exciting markets.
Some of these investment tools are Bitcoin and Blockchain exchange-traded funds (ETFs). These funds invest in firms that use or develop blockchain technology or Bitcoin. These ETFs track the prices of specific assets using futures contracts or just by owning the underlying digital asset.
Reality Shares Nasdaq NexGen Economy ETF (BLCN)
This is one of the first blockchain-related ETFs that was released to the market. The fund has $85 million assets under management and was issued by Reality Shares. BLCN has 60 percent of its stock from companies that are related to blockchain technology. BLCN is focused on the US market with a 45% of the investment allocated in American companies.
Additionally, 80% of the holdings are related to companies with long term blockchain strategies. Two of the companies they’ve invested in are Intel Corporation and Microsoft Corporation.
Amplify Transformational Data Sharing ETF (BLOK)
This blockchain ETF was launched back in January 2018 and it has $117 million assets under management. This ETF owns stocks of different companies in the market such as IBM, NASDAQ or Overstock. Other firms in which this fund invested are Digital Garage Inc and GMO Internet.
Compared to BLCN, BLOK focuses on short-term investments. This is a riskier strategy since some of these firms have been in the market for a short period of time and need to show that they are able to overcome difficult times.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
This ETF has $46 million assets under management and it promotes a different strategy compared to the one followed by the previous ETFs mentioned. It will be providing more diversification of assets. Using the Indxx Blockchain Index, the fund will be monitoring companies from all over the world related to the technology to see how they have been developing and behaving during the last months.
The fund will be investing in companies that already use blockchain technology, companies that have just started to use blockchain technology, or companies that have their own blockchain products and services.
Amun ETP (HODL)
This is a Bitcoin exchange-traded product (ETP) which is similar to an ETF but it is regulated differently than an ETF in Switzerland. This fund is being offered by Amun Crypto and it is being traded on the Six Swiss Exchange.
This ETP has been designed to track an index that is based on the movement and fluctuation of five different digital currencies in the market.
A spokesperson from Finma, the financial regulator of Switzerland, commented about it:
“It is important to separate ETPs from ETFs, as ETPs are not subject to the Collective Investment Schemes Act (Cisa) and are therefore not supervised by Finma.”
Almost 50% of the assets will be invested in Bitcoin (BTC), the most popular digital currency in the market. The rest of the investments will be divided among Bitcoin Cash (BCH), XRP, Ethereum (ETH) and Litecoin (LTC).
Innovation Shares NexGen Protocol ETF (KOIN)
This fund has $10 million assets under management and it is one of the newest ETFs launched to the market. The fund uses artificial intelligence in order to find new blockchain stocks, targeting them with specific keywords.
Most of the companies in which the fund invested in are related to large-cap companies, similar to BLCN. Some of these firms are Microsoft and Visa. This would clearly attract investors that prefer a lower risk when investing.
Reality Shares Nasdaq NexGen Economy China ETF (BCNA)
This is another ETF that is offered by Reality Shares and has around $1.93 million in assets under management. This blockchain ETF focuses on the Chinese market. China is one of the most important countries in terms of blockchain development around the world. Back in 2017, the Asian country registered a larger number of patents related to blockchain technology.
Clearly, the country has the potential to be a leader in the blockchain space. Eric Ervin, the CEO of Reality Shares, commented that China’s interest in distributed ledger technology (DLT) is very high. The main holding that the company is investing in is Alibaba. Additionally, they are also investing in A-Shares in China’s stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
In order to invest in a specific stock, analysts make a good investigation on how innovative these solutions are for the market.
Bitcoin ETF Proposal Withdrawal
A few days ago, VanEck and the Cboe decided to withdraw the application that they have for the approval of the first Bitcoin ETF. The U.S. Securities and Exchange Commission (SEC) has been evaluating different ETFs in the past related to Bitcoin but none of them was approved.
The one presented by VanEck had the highest chances of being approved as soon as February 27, 2019. However, this will not happen. The decision to withdraw the application is related to the fact that the government has been inoperative for almost a month. The approval of such investment tool requires time to be analysed, and the regulatory agency of the U.S. was not working at full capacity.
In the future, new proposals for ETFs will be presented to the SEC. One of them will eventually be approved. This would allow new investors to enter the market and place their funds in the crypto space. Crypto enthusiasts in the space were really waiting for the approval of this ETF. The SEC’s main worries are related to market manipulation and the lack of liquidity in several exchanges. Moreover, the regulatory agency of the U.S. wanted to keep the ETF far from retail investors in the market.
In order for a Bitcoin ETF to be approved during this year, the proposal should be submitted before the end of May.