Blockchain ETF

What Is a Blockchain ETF?

A blockchain ETF is similar to standard sector- or theme-based stock investments through exchange traded funds (ETFs), working by exclusively investing in a basket of blockchain-based companies. The companies owned in a blockchain ETF have business operations in blockchain technology or are those that invest or profit from blockchain.

  • Blockchain ETFs are exchange traded funds that invest in a basket of companies that use blockchain technology for operations.

  • The main thesis of blockchain ETFs is that blockchain technology enables companies that use it to cut costs and simplify their operations through decentralization.

  • Blockchain ETFs come with the inherent risk of investing money in tech startups that could fail and hit regulatory roadblocks across the globe.

Understanding Blockchain ETFs

Blockchain is a fairly new technology that generates a ledger, which stores all information regarding a transaction (date, time, dollar amount, etc.). This ledger is decentralized, meaning it is not kept in one location but rather distributed across a network that can be viewed by the public. The information in the ledger is also incorruptible.

Blockchain ETFs offer dual benefits—pooled investments in baskets of stocks like that of a mutual fund, and real-time trading with tick-by-tick price changes like that of a stock.

Blockchain ETFs vs. Bitcoin ETFs

Blockchain ETFs have a broader mandate as compared to Bitcoin ETFs, which are yet to be approved by the Securities and Exchange Commission (SEC). This is primarily because blockchain, the technology, can be used in multiple industries beyond finance. For example, it is being used in the supply chain industry to track the origin of a produ