While crypto enthusiasts still have to wait on the approval of the first Bitcoin ETF, they can now invest in a new blockchain ETF. This breakthrough in the timeline of digital assets is possible thanks to the joint efforts of two asset management companies. The partners in this project are Invesco from the United States and London-based Elwood Asset Management. They launched their blockchain ETF on 11 March and it is now active on the London Stock Exchange.
A US-Based Blockchain ETF Launched in the UK
In the United States, the Securities Exchange Commission (SEC) still has an ambiguous position towards this type of exchange-traded fund. So, as a firm supporter of blockchain, Invesco decided to join efforts with a UK-based company and start its ETF.
The Invesco Elwood Global Blockchain UCITS ETF plans to attract companies that have the potential of generating real earnings from the blockchain technology. German company Solactive AG, specialised in providing financial indices, calculates the index for this ETF.
Details about the Blockchain ETF
At the moment, the blockchain ETF contains 48 companies. The largest geographical areas represented in the fund are
- 39% – United States;
- 29% – Japan;
- 12% – Taiwan.
In terms of industries in which the companies operate, the information technology sector leads by 46%, followed by finances (23%) and communication services (9%).
Some of the companies found in the UK-listed ETF are:
- Square – financial services and mobile payment company, developer of Cash App;
- Overstock – online retail owned by two crypto supporters;
- CME Group – a Bitcoin futures trading operator;
- Kakao – messaging app developer based in South Korea;
- Monex Group – a Japanese cryptocurrency exchange operator;
- TSMC – a cryptocurrency chip producer based in Taiwan.
These are companies with assets that are well-positioned to capitalize on the emerging opportunities for blockchain. Over time, however, we would expect the balance to shift naturally to companies with more significant direct exposure to blockchain-related earnings as the technology becomes more ubiquitous.
What This Bitcoin ETF Means for The Digital Assets Environment
The Invesco-Elwood blockchain ETF at the London Stock Exchange will remain a landmark event in the history of crypto assets. Although there are 6 other similar ETFs available in the world (in Canada and the US), this is the first one for the European region.
The head of EMEA ETF equity product management at Invesco, Chris Mellor, described the decision to launch the fund:
The potential for blockchain to drive real earnings is huge, but it is often hidden within companies involved in other areas. This ETF offers investors access to companies with real earnings now, but with the added potential of blockchain-related earnings not reflected in their share prices.
His statement is on a similar note to Bin Ren’s, the CEO of Elwood Asset Management. In Mr. Ren’s opinion:
We believe the potential for blockchain to change the global economy is greatly underappreciated in today’s market, much like the internet was in the beginning, when most people couldn’t see past its usefulness for email.
The blockchain ETF founded by Invesco and Elwood has the Bloomberg code BCHN and charges an annual management fee of 0.65%. You can monitor the ticker for the ETF here. At the time of writing, the index has a positive variation of 0.26%. The price of a share is around US$40. So far, there are 500,000 issued shares with a total value of US$20 million.