A good news for crypto adorers: Reality Shares Advisors and Amplify Trust ETF launched the first blockchain-based exchange-traded funds (ETFs) on Nasdaq and the New York Stock Exchange Arca yesterday.
Reality Shares’ Nasdaq NextGen Economy ETF (BLCN) opened at $24.20, while Amplify’s Transformational Data Sharing ETF (BLOK) started at about $20.
According to Reality Shares, BLCN “invests in the companies that are developing this truly innovative and transformational blockchain technology.” BLCN focuses on companies with a high Blockchain Score (a proprietary ranking system that was designed for identifying blockchain companies expected to benefit the most from the new blockchain technology).
“Many companies and organizations are innovative, but uncovering which companies may present real, actionable blockchain-related investment opportunities can be challenging. The Blockchain Score methodology is designed to identify the companies that may benefit most from blockchain technology and potentially pinpoint what could be the best of a growing segment of companies developing the underlying technologies behind blockchain innovation.
The Blockchain Score methodology is a rules-based, quantitative process built to evaluate the highest-quality companies in various industries across the globe based on their blockchain-related innovative potential,” according to Reality Shares.
As for the BLOK ETF, it also focuses on companies that are developing blockchain technology. Moreover, holdings include companies with blockchain-related partnerships that could be financially beneficial. Amplify Trust plans to be very active in managing the BLOK fund in order to maintain it on top of the rapidly-changing blockchain landscape.
The first prospectuses were filed by Reality Shares Advisors and Amplify Trust ETF in November 2017. Then the companies noted that investing in blockchain startups could be risky because of regulations on the technology, thus companies may not necessarily get a profit. However, the prospectuses also pointed out that the funds would only invest in companies with a market capitalization exceeding $200 million and a six-month daily trading average of at least $1 million.
Kian Salehizadeh, Reality Shares’ analyst, said: “We wanted to do a blockchain technology-related ETF, so not another bitcoin fund but something that takes advantage of the underlying ecosystem. So we developed a methodology in-house which measures seven quantitative factors and we run those factors on a universe of publicly traded data.”
Potential investors should keep in mind that this ETF does not invest in cryptocurrencies, like bitcoins. Some experts believe that not the cryptocurrencies themselves, but the underlying blockchain technology is the real crock of gold for investors.
Antonis Polemitis, blockchain expert and CEO of the University of Nicosia, said: “This is an industry that we think that over several decades will be as revolutionary as the Internet. We’re going to have several million people working in this industry, if not tens of millions.”
According to Kian Salehizadeh, the word “blockchain” was originally included in the names of the ETFs. But a couple of days before launch, the U.S. Securities and Exchange Commission (SEC) insisted on dropping this term.
Some companies have filed for blockchain-based ETFs earlier, but Reality Shares and Amplify Trust are the first to go so far.