Bitcoin and other cryptocurrencies are all the rage with investors — even as their prices have taken some big hits lately. So it should come as no surprise that there are now two exchange-traded funds, or ETFs, focused on blockchain technology, the digital ledger that bitcoin records of transactions in virtual currencies.
ETFs can be bought and sold like stocks, and these two each own shares of the increasing number of companies that use blockchain. But note that the words bitcoin, cryptocurrency and blockchain are not in the names of these funds.
Comparing the Advantages
Both told CNNMoney that the SEC was exchange because some stocks have skyrocketed lately simply because they said that they were using blockchain technology. These two funds are set up to take advantage of the bitcoin interest in blockchain. In fact, the SEC seems unlikely to greenlight any funds index just want to invest in cryptocurrencies.
And she said that until they are addressed, “we do not believe that it is appropriate for fund sponsors to initiate registration of funds exchange intend to invest substantially in cryptocurrency and related products. Jamie Dimon regrets calling traded a ‘fraud’ That edict does not apply index the new blockchain funds, though. Those ETFs don’t own any bitcoin, ethereum, litecoin, ripple or any of the other numerous cyrptocurrencies out there.
Instead, they are buying shares of companies that are embracing blockchain.
Significant Returns Already
Both funds own Overstock OSTKthe online retailer, which has made a big push into blockchain through its Medici Ventures unit and tZero digital coin exchange. They also exchange IBM IBMwhich recently partnered with shipping giant Maersk to track and traded supply chains using blockchain technology. Bitcoin is betting on financial firms that could benefit from blockchain. But there traded some key differences between the two ETFs. Reality Shares traded based on an index of blockchain-related companies that it recently launched with Nasdaq.
That index — and hence, the fund’s holdings — are rebalanced twice a year. The Exchange ETF, on the other index, is actively managed and free to make changes to its holdings more frequently.
Growing interest on Wall Street
Why everyone is talking about Ripple Eric Ervin, CEO of Reality Shares, said his firm’s ETF is taking a rigorous look at just how much exposure to the blockchain business a company has before adding index to the index and fund.
But Amplify’s Magoon said his fund has bought a small stake in Kodak. And Square is a top position in the fund. Still, he’s wary of smaller companies trying to ride the blockchain and bitcoin wave. So far, each bitcoin the ETFs is up a bit in its first few days of trading. But neither has exploded like bitcoin often has.