The blockchain based investment space is getting crowded. Following the launch of four blockchain ETFs in January of this year, another one was recently launched. (See also, How Do Blockchain ETFs Work?)
Meet the BKC ETF
Brian Kelly, the CEO and founder of BKCM and a CNBC contributor, has launched a new actively managed blockchain startup-based exchange traded fund (ETF) called the REX BKCM ETF (BKC). BKCM LLC is an investment firm focused on digital currencies.
The ETF is being launched in partnership with REX Shares founder Gregg King, and will be comprised of investments in around 33 blockchain- and cryptocurrency-related companies. The fund seeks to generate total return by investing in stocks of global companies which attempt to generate revenue and profit from cryptocurrency-related and enterprise blockchain technology-related projects and businesses. It will support firms from the seed stage onward. The ETF will trade on NYSE ARCA exchange under the ticker symbol BKC and will have an expense ratio of 0.88 percent.
At the time of launch on Wednesday, the top five holdings of the fund included the Taiwan Semiconductor Manufacturing, Global Unichip, GMO Internet, Overstock.com (OSTK) and SVB Financial Group (SIVB ), each with an 8 percent weighting. The other notable names in the holding list include Square Inc. (SQ) and chipmaker Advanced Micro Devices (AMD).
Brain Kelly on Blockchain ETF
"I get asked all the time on how to invest in blockchain technology without dealing with storage, the fears of hacking, hedge funds, etc. My hope is the BKC ETF can provide this desired equity allocation to institutions and individuals alike," Kelly said in a statement.
Speaking to CoinDesk, he outlined the basic strategy for selecting the eligible companies. The eligible ones should fit one of the four criteria - enterprise blockchain, or companies using the technology to streamline existing business processes; Wall Street disruptors, like those developing or offering services on changing how securities are traded (like Overstock.com's tZero exchange system); mining focused entities; and exchange firms and startups creating a decentralized internet.
Being an actively managed ETF allows the fund manager the flexibility to add, reduce and switch investments in different companies, as the blockchain and cryptocurrency sector will evolve along the road. While it will invest in enterprise companies operating in the blockchain space, over time it may focus entirely on blockchain-specific startups. Though the fund will not invest in cryptocurrencies, it will remain open to companies with regulated security offerings.
The other blockchain-based ETFs that were launched in January include Reality Shares Nasdaq NexGen Economy ETF (BLCN ), First Trust Indxx Innovative Transaction & Process ETF (LEGR ), Amplify Transformational Data Sharing ETF (BLOK) and Innovation Shares NextGen Protocol ETF (KOIN ). All have been trading flat since their launch till date. (See also, 5 Ways to Invest in the Blockchain Boom.)
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