- BlackRock’s latest strategy could prompt other large firms to follow suit, according to industry experts.
- Investing in cryptocurrencies involves high risks, and the investment case is weak, according to a Vanguard spokesperson.
- BlackRock’s blockchain ETF (BLOK) may struggle to surpass Amplify Investments’ Transformational Data Sharing ETF (BLOK) in terms of assets.
According to industry insiders, BlackRock’s latest plan could impulse big competitors to follow suit. It would be interesting to see how such products will be charged in the crowded space.
In a regulatory filing, the world’s largest asset management manager outlined an ETF that would invest in companies involved in the development and use of crypto technology.
Sumit Roy, the crypto editor, and analyst from ETF.com said he believes that this reiterates the notion that blockchain technology has now become mainstream, as he thinks it will motivate competitors such as State Street and others to release more such products.
Last year, State Street, which looked at around $40 trillion of assets, released a new digital finance division. However, there is no official announcement regarding whether its asset management division is considering ETFs in the space.
A Vanguard’s representative, which handles over $8 trillion in assets that also includes $2 trillion in US ETFs, revealed that the firm has no plans to seek a digital assets product.
The spokesperson said, in Vanguard’s opinion, the investment case is weak and the risks of investing in cryptocurrencies are high. Cryptocurrencies, unlike traditional asset classes such as stocks and bonds, have no intrinsic economic value and rarely generate cash flows such as interest or dividends, he further.
The spokesperson went on to say that the firm believes blockchain has potential, adding that Vanguard has utilized the technology to improve data indexing and digitize some currency markets.
Clients are becoming more intrigued by cryptocurrencies, according to David Botset, head of equities product management and innovation at Schwab Asset Management.
Charles Schwab already has four mutual funds and four exchange-traded funds (ETFs) with third-party crypto connections.
“We are currently evaluating how and when we could offer our clients additional opportunities for exposure to cryptocurrencies, including opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF,” Botset told Blockworks in an email.
Botset revealed that they’re actively exploring how and when they might be able to provide their clients with greater cryptocurrency exposure, such as spot cryptocurrency or blockchain technologies in the form of an ETF.
Invesco Alerian Galaxy Crypto Economy ETF (SATO), another top-5 ETF issuer, debuted in October. In September, the asset manager announced a collaboration with Galaxy Digital on physically backed digital asset ETFs.
The Transformational Data Sharing ETF (BLOK) of Amplify Investments is currently the largest blockchain-focused ETF. It was founded in January 2018 and now has a market capitalization of around $1 billion.
The Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction & Process ETF (LEGR), both with roughly $230 million and $150 million in assets, are two other big funds in the category. The majority of the companies that have launched in the past year have yet to gain significant assets.