Blockchain ETFs

This post was originally published on August 06, 2019, and sent to Messari Pro subscribers.

At the peak of the last bull market, investors around the world were clamoring to invest in “blockchain” and the crypto trend any way they could. When a publicly traded biotech company changed its name to Riot Blockchain Inc., its stock price soared 600% in a matter of months. Overstock.com made it well-known they were actively building blockchain tech causing it to rise with the price of bitcoin (and later fall just as hard). Looking at the returns, it’s clear investors were looking for tangential assets that could capitalize on the blockchain trend without getting their hands dirty with the actual cryptoassets themselves.

Although the bitcoin ETFs haven’t yet been approved, three Exchange Traded Funds (ETFs) have launched with the goal of tracking the returns of companies developing, researching or utilizing blockchain technology. Though due to SEC fears over crypto mania, none of these could actually include the words “blockchain” or “bitcoin” in their names. Hence their general ambiguity.

• Reality Shares Nasdaq NexGen Economy ETF ($BLCN) is a passive ETF that rebalances semi-annually based on a proprietary Blockchain Score™ used to rank companies with the highest potential for increased economic profit, operational efficiencies, and transformational business practices resulting from their work in blockchain.
• Amplify Transformational Data Sharing ETF ($BLOK) is an actively managed ETF with a mandate of keeping 80% of its assets in companies involved in development and utilization of blockchain technologies.
• Innovation Shares NextGen Protocol ETF ($KOIN) takes a more unique approach using artificial intelligence and a natural language processing algorithm to select stocks that fit into four categories: cryptocurrency as payments, mining enablers, solutions providers, and adopters.