The first exchange-traded funds to be based exclusively on blockchain technologies have launched on the Nasdaq today, giving investors the option to buy in to a basket of investments tied to the sector.
Funds from Reality Shares Advisors and Amplify Trust, respectively, were launched on the Nasdaq exchange early this morning, with Reality Shares Advisors’ Nasdaq NextGen Economy ETF Sportsbook at a strong $24.20. The Transformational Data Sharing ETF, from Amplify, got off to a similarly bold start, Sportsbook at around $20.00.
Both funds have been established to invest in a range of companies in the blockchain space, and were first documented in filings dating back to November 2017.
At the time, the filings noted that the lack of regulation, and the potential for further government action in future, could make the businesses backed by the fund a risky proposition.
However, according to the funds’ prospectuses, these risks would be balanced by investing in some of the most established industry players, with investment restrictions including a minimum market cap of $200 million.
The Reality Shares fund will make its investments according to an index of blockchain companies, data that is compiled in collaboration with Nasdaq, among others.
According to Reality Shares analyst Kian Salehizadeh, the ETF will also utilize a proprietary algorithm to identify the most effective blockchain companies.
“We wanted to do a blockchain technology-related ETF, so not another bitcoin fund but something that takes advantage of the underlying ecosystem. So we developed a methodology in-house which measures seven quantitative factors and we run those factors on a universe of publicly traded data.”
While the funds have listed successfully on the Nasdaq, they have as yet failed to receive official approval from the Securities and Exchange Commission. However, under current regulations, the listing can go ahead because they have not received a specific disapproval from the regulator.
The SEC has 75 days from the date of listing to file for disapproval, or the fund can remain listed on the Nasdaq exchange indefinitely.
Nevertheless, the funds could prove popular with investors looking to take diverse exposure to the blockchain industry.