Invesco launches two blockchain ETFs
Invesco has launched two new blockchain ETFs, developed in partnership with bitcoin miner Galaxy Digital and index house Alerian.
- Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC)
- Invesco Alerian Galaxy Crypto Economy ETF (SATO)
Both funds start out by putting 15% of their assets in the Grayscale Bitcoin Trust, a closed-ended fund that owns physical bitcoins. However they take different approaches thereafter.
BLKC takes a broad and loose approach to blockchain. It invests in the core group of companies in blockchain: bitcoin miners, semiconductors, bitcoin custodians and trading apps. But also includes companies that are researching or developing blockchain technology in any way. This opens the door for wide interpretation and allows Accenture, Walmart and Citi into the fund.
SATO takes a narrower and focussed approach to blockchain and only holds 39 stocks. It focusses on bitcoin miners, trading apps, etc. It will likely have a high correlation to the bitcoin price as bitcoin miners – like every kind of miner – have share prices that correlate with the value of what they mine.
The funds charge 0.60%.
Bernie’s commentary – regulatory coherence
I’m a bit puzzled by US regulators’ approach to bitcoin. On the one hand they’re fine with closed ended bitcoin funds like Grayscale. They’re fine also with crypto exchanges like Bittrex, Coinbase etc. They’re also fine with ETF issuers like Invesco making blockchain ETFs that have a very close correlation with the bitcoin price. Which to me looks a bit like regulatory arbitrage.
And yet they’re wholeheartedly against bitcoin ETFs.
If the regulators were to take the Chinese approach and just ban everything then yeah OK –its consistent. Conversely if they were to take the Swiss approach and allow bitcoin ETFs along with the rest – then again its consistent. But this middle ground that US regulators have found themselves in just seems to lack coherence.
As for today’s launches, I prefer the SATO fund. It seems to be to be making the best of a messy situation.