Defiance launches NFT focussed thematic ETF
Defiance ETF, the New York-based boutique, is launching a thematic ETF that targets non-fungible tokens, known as NFTs. NFTs are tokens on the ethereum blockchain that can confer ownership of things—although their legal standing remains questionable.
To date, NFTs have mostly focussed on online photos and art, where buyers bid at auctions for them. This one recently sold at a Christie’s auction for $69 million.
The Defiance Digital Revolution ETF (NFTZ) will invest in companies that have blockchain-related and NFT-related business lines. It tracks the BITA NFT and Blockchain Select Index, which is provided by indexing newcomer BITA.
According to the prospectus, the fund is most interested in crypto asset managers, payments companies, miners, and hardware businesses. (The top holdings are in the table below). This makes it look quite like other blockchain ETFs.
It does not buy cryptos or NFTs directly, nor does it buy any crypto derivatives, nor does it buy any other funds or ETFs holding crypto.
The fund charges 0.65%.
|
Name |
ETF Weight |
|
Silvergate Cap Corp |
6.23% |
|
Plby Group Inc |
5.96% |
|
Cloudflare Inc |
5.62% |
|
Northern Data Ag |
5.12% |
|
Sbi Holdings Inc |
4.86% |
|
Bitfarms Ltd/canada |
4.48% |
|
Marathon Digital Holdings Inc Com |
4.40% |
|
Coinbase Global Inc |
4.30% |
|
Hut 8 Mng Corp New Com |
4.01% |
|
Ebay Inc. |
4.00% |
|
Hive Blockchain Technologies |
3.98% |
Bernie’s commentary – not much to do with NFTs
Like many others I’ve been surprised by the speed at which NFTs have taken off. These internet tokens, which offer legally ambiguous ownership of online pictures, are selling for millions of dollars.
NFT cheerleaders insist that these tokens create real value as they help redesign the art market. The HBR writes:
“Historically there was no way to separate the “owner” of a digital artwork from someone who just saved a copy to their desktop. Markets can’t operate without clear property rights... NFTs solve this problem by giving parties something they can agree represents ownership.”
While critics respond that this ownership problem was never real thanks to copyright laws. And claim that NFT demand comes from money launderers—much like the regular art market, but with even less KYC/AML.
The good news for this new ETF though is that this debate around NFTs doesn’t matter. Looking at the holdings, this looks to me mostly like a bitcoin miners ETF. It looks very similar to the Bitwise Crypto Industry Innovators ETF (BITQ). I cannot really see what this has to do with NFTs at all—it certainly doesn’t directly invest in any of them.
That’s not a swipe at Defiance by the way. I think avoiding any direct holdings of NFTs at least for now is kind of wise. It will be interesting to see how it evolves.
And for anybody that reads this far, the image has nothing to do with the subject but i couldn't find any image that related to NFT, that people would logically make the connection.