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Off The Block: A Fast Start For A Blockchain ETF

January 25, 2018 7:41 am
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With all the pent up demand for assets related to digital currencies, it probably isn't surprising that exchange-traded funds with purported exposure to cryptocurrencies or blockchain technologies are popular with investors.

Just look at the Amplify Transformational Data Sharing ETF (NYSE:BLOK), which debuted earlier this month. As of Jan. 23, the actively managed ETF had $122.3 million in assets under management. While 2018 is still in its nascent stages, BLOK is one of the most successful rookie ETFs to debut in 2018's early innings.

“Blockchain is a revolutionary technology that has the potential to redefine enterprises, ecosystems and economies, transforming the way data is shared,” according to Amplify ETFs. “BLOK provides access to an actively-managed basket of global companies at the forefront of blockchain-based technology.”

Blockchain In All But Name

At first glance, BLOK's official name doesn't necessarily imply that the fund targets blockchain-related companies and technologies. The reason for that is the Securities and Exchange Commission is cracking down on unwieldy use of “blockchain” in company names.

“The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering,” said SEC Chairman Jay Clayton at a conference earlier this week, reports Reuters.

At the behest of regulators, neither BLOK nor the rival Reality Shares Nasdaq Blockchain Economy ETF (NASDAQ:BLCN) explicitly mention blockchain in their names. The Reality Shares Nasdaq Blockchain Economy ETF also debuted last week and is also positioned as a blockchain ETF. BLCN has also started well as highlighted by $58.4 million in assets under management.

Inside BLOK

BLOK currently holds 49 stocks. Familiar names among the new ETF's holdings include Taiwan Semiconductor Ltd. (NYSE:TSM), Nvidia Corp. (NASDAQ:NVDA), International Business Machines (NYSE:IBM) and Intel Corp. (NASDAQ:INTC).

The bulk of BLOK's holdings hail from the technology sector, but nearly 31 percent of its components are financial services companies.

“According to Gartner Group, Blockchain is estimated to have delivered $4 billion in business value-add or technology innovation in 2017, with that growing to $21 billion by 2020, $176 billion in 2025, and $3.1 trillion by 2030,” said Amplify ETFs.

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