DEFINITION of 'Blockchain ETF'

Similar to any standard sector- or theme-based stock investments through exchange-traded funds (ETF), blockchain ETFs work by exclusively investing in a basket of blockchain-based companies that have business operations in blockchain technology or those which invest or profit from it. 


Blockchain ETFs offer dual benefits - pooled investments in baskets of stocks like that of a mutual fund, and real-time trading with tick-by-tick price changes like that of a stock.

While bitcoin-based ETFs have been rejected by regulators owing to questions of control, those based on the underlying blockchain technology are seeing the light of the day as the use of blockchain technology spans far and wide beyond the monetary system. (See also: SEC Denies Winklevoss Twins' Bid to Launch Bitcoin ETF.)

Blockchain ETFs can be actively managed or passively managed, will cover companies with international exposure, and will track the performance of blockchain-based indexes specially designed to serve as benchmarks for the ETFs.

Two popular blockchain ETFs include the Reality Shares Nasdaq NexGen Economy (BLCN) ETF and the Amplify Transformational Data Sharing (BLOK) ETF.

Such blockchain ETFs come with the inherent risk of betting money on technology-based startups as the blockchain concept is still evolving, and regularly hitting regulatory roadblocks across the globe.

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