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VanEck Is Planning An Equity-Based ETF That's A Spin On Crypto

January 22, 2021 7:40 am
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VanEck Is Planning An Equity-Based ETF That's A Spin On Crypto

There still isn't a bitcoin exchange-traded fund in the U.S. When that's going to change is up for considerable debate, but in the meantime, investors have some other avenues to consider, including blockchain exchange-traded funds.

What Happened: VanEck, an ETF issuer that's long had sights on a bitcoin ETF, is proposing another prescription: The VanEck Vectors Digital Assets ETF. The issuer revealed plans for the fund in a recent filing with the Securities and Exchange Commission.

“Digital asset companies may include small- and medium-capitalization companies and foreign and emerging market issuers, and the Fund may invest in depositary receipts and securities denominated in foreign currencies,” according to the filing.

Why It's Important: Assuming it comes to market, the Digital Assets ETF will follow the MVIS Global Digital Assets Equity Index.

“To be initially eligible for inclusion in the Index, a company must generate at least 50% of its revenues from (i) digital assets projects or (ii) projects that, when developed, have the potential to generate at least 50% of their revenues from the digital assets industry,” according to the filing.

“Companies with less than 50% of their revenues from the global digital assets segment, including semiconductor and online money transfer companies, may be added to the index to reach a minimum component number. Index component weights are based upon free-float market capitalization and individual components are limited to a maximum of an 8% weighting in the Index.”

Information on the index is currently scant and the filing doesn't mention specific components.

However, there are some qualifiers for membership, including “those that operate digital asset exchanges, payment gateways, mining operations, software services, equipment and technology or services to the digital asset industry, digital asset infrastructure businesses, or companies facilitating commerce with the use of digital assets, among others. They may also include companies which own a material amount of digital assets, or otherwise generate revenues related to digital asset operations.”

What's Next: The filing does mention risks associated with investing in the financial services and technology sectors, indicating those groups could be found in the new ETF.

On the other hand, the filing doesn't include a ticker or expense – signals that launch of the VanEck Digital Assets ETF isn't imminent.


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