ProShares, the massive ETF company, has opted to offer exposure to cryptos and blockchain via blockchain companies, at least according to a recent filing with the Securities and Exchange Commission (SEC).
Unlike a pure crypto ETF that would give investors direct exposure to the price of major tokens, the new ProShares ETS would invest in companies that work in the blockchain space, according to the prospectus filed with the SEC.
More specifically, the ETF would track the S&P Kensho Global Crypto and Blockchain Index, which focuses on companies that operate in the blockchain sector. The new ETF would be called the ProShares S&P Kensho Global Crypto and Blockchain ETF, if approved by the SEC.
The demand for a pure play crypto ETF in the US markets has existed for years, and over the past few months, numerous companies have floated the idea of a crypto ETF.
ARK is going into the Bitcoin ETF business, which may attract more liquidity to the markets. It isn’t difficult to see why such a successful company has been drawn into the crypto investment world,
Grayscale’s crypto investment funds have been going gangbusters, and it now controls at least 2% of the Bitcoin that is thought to be running around the markets.
One wonders why ProShares opted for blockchain tech companies, and not the tokens themselves?
Does Buying Blockchain Tech Stocks Make Sense?
As blockchain has grown into a more mature industry (these are funds and companies that are listed on major exchanges) numerous ways to tap into blockchain and crypto tech have been listed for the general public.
Of course, in most nations, people can just buy tokens, but these offerings give investors the peace of mind that comes with a massive financial system.
Companies like Marathon Patent Group and Hive are basically crypto miners, so if a person buys those shares, they are buying an asset that is highly leveraged to the price of whatever tokens the company mines, and is holding.
To be fair to most of the miners, they have beaten Bitcoin’s performance, depending on what time scale one likes to use for the measurement.
ProShares S&P Kensho Global Crypto and Blockchain ETF wouldn’t be a direct play on major token prices, or really, a way to gain access to decentralized assets at all.
While some companies in the index may have leverage to decentralized projects, most are pure software companies that are working with commercial blockchain applications.
What is the Investment Thesis?
There is no longer a “typical token holder” and people are buying up tokens for all sorts of reasons.
Some people still want to have digital money that no one controls, but more and more, there is a profit motive involved.
For anyone that thinks they need a back-up in case the fiat currency system goes down – these ETFs, or even the miners, aren’t going to be a good buy.
On the other hand, if a person is looking to profit from Bitcoin and other tokens, a miner makes sense, as long as a government doesn’t decide to cancel the mining industry – as just happened in China.
Stay Aware in the Markets
The ProShares S&P Kensho Global Crypto and Blockchain ETF will likely support liquidity in blockchain development, which is probably positive.
However, investors need to be aware of what they are buying, and that “blockchain” isn’t the same thing as “decentralized”.
As more of these investment vehicles hit the market, investors will need to do even more research to stay on top of what is being put on offer.
We suspect that few will actually give investors direct exposure to tokens, and almost none will guarantee custody of tokens themselves.