Just in time for the Coinbase offering, this new fund offers exposure to the infrastructure powering 'digital assets'.
No, there's still no Bitcoin ETF.
But in yet another sign of how strongly the investment-management world believes in cryptocurrencies and blockchain technologies, an exchange-traded fund launching today will offer access to the "digital asset ecosphere."
The VanEck Vectors Digital Transformation ETF (DAPP) will offer investors exposure to the infrastructure of the world of blockchain, from miners to digital asset exchanges to storage solutions, said John Patrick Lee, a VanEck product manager.
"Bitcoin is the flagship digital asset," Lee said in an interview. "But it's only part of the story. We see the entire ecosystem as a long-term structural growth story. Adoption, integration, and interest have been happening on the retail ."
The firm's CEO, Jan van Eck, speaking at a MarketWatch-Barron's conference on crypto assets in early April, almost seemed to tease the new ETF. In response to a question about whether there are enough ancillary companies operating in the ecosphere to warrant an ETF, van Eck agreed.
"We think there are finally enough public companies in the ecosystem, whether miners or banks, to put together a portfolio of companies that have this exposure," van Eck said.
He noted that pure-play companies in the space have outperformed those that are involved in crypto or blockchain as one part of their overall business, such as Paypal Holdings Inc. $(PYPL)$ .
That's one of the new ETF's guiding principles, Lee told MarketWatch. The index behind the fund is designed to limit exposure to companies that aren't pure digital-asset plays. That distinguishes it from an ETF already on the market, the Amplify Transformational Data Sharing ETF $(BLOK.UK)$, which shares many of the same holdings as DAPP, but also includes digital asset-dabblers such as Overstock.com Inc.
BLOK also includes a stake in the Grayscale Bitcoin Trust(GBTC), which is, for now, one of the best options for American investors looking for exposure to Bitcoin. (The Purpose Bitcoin ETF is available in Canada.)
In contrast, DAPP"will not invest in digital assets (including cryptocurrencies) (i) directly or (ii) indirectly through the use of digital asset derivatives," VanEck notes in a release, in bold print.
At launch, DAPP's top holdings will be Voyager Digital, Marathon Digital Holdings Inc. (MARA), Square, Silvergate Capital Corp, (SI) and Riot Blockchain $(RIOT)$. The Index will rebalance quarterly, and, among other things, will attempt to get its portfolio as close to 100% pure-play stocks as possible. In addition to Coinbase , which will go public on April 14, there's a robust pipeline of other companies set to list, Lee said.
This story originally listed Square Inc. as a non-pure-play stock, according to the index tracked by the ETF. It has been corrected.
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