Yesterday saw the Schwab Crypto Thematic ETF (STCE) start trading on NYSE Arca, Schwab’s first crypto ETF. The asset manager says its ETF has more crypto bias than others that focus more on blockchain.
“The index (that) STCE is designed to track can offer more targeted exposure to cryptocurrency-focused companies compared to blockchain technology ETFs, which may have significant exposure to multi-national companies involved in blockchain,” said David Botset, Managing Director, Head of Equity Product Management and Innovation at Schwab Asset Management.
The asset manager first announced plans for the ETF back in March. Current index constituents are heavily weighted towards cryptocurrency, especially companies focused on bitcoin and mining. The five largest holdings account for thirty percent of the assets. They are in bitcoin investor Microstrategy, mining companies Marathon Digital and Riot Blockchain, cryptocurrency exchange Coinbase and crypto onramp Silvergate. Several other miners are also included in the index.
Schwab says the index covers four segments which we’d roughly describe as:
- mining or staking
- investing or trading crypto or other digital assets
- enabling crypto and other digital assets for payments
- applications that use blockchain or DLT, including digital assets.
While there are numerous crypto-related ETFs, most of them aren’t particularly large. For example, four of the five best performing ETFs over the last week have been crypto-related. They include big names like Fidelity, SkyBridge and VanEck. The largest assets under management (AUM) amongst those three ETFs is $38 million. The fourth is from Bitwise, which has $77m AUM.
So far, the US SEC has not given the green light to any ETF that invests in spot bitcoin. In October last year, Proshares received the go-ahead for an ETF related to bitcoin futures. That has one of the largest market cap for a U.S.-based ETF at just under $800 million. It went live just before bitcoin’s value peaked in November, so the price is currently down 65% since launch.