The Amplify Transformational Data Sharing ETF (BLOK) was the first active ETF to come to market within the crypto space, seeking to capture the innovation, growth, and potential that blockchain technology offers, and the companies capitalizing on that. Now, with potential regulation on the horizon after the announcement of President Biden’s executive order calling for thorough research into the crypto economy and the impacts the creation of a central bank digital currency (CBDC) would have, the co-portfolio managers of BLOK discuss what regulation could mean for the fund in the March BLOK-Chain Monthly newsletter.
“We all want smart regulation like we want smart beta, but exactly what form that takes is the question. For this reason, given the war is everyone’s first priority, we were encouraged by President Biden’s decision to move forward with an Executive Order to study crypto-currency regulations,” wrote Dan Weiskopf and Mike Venuto, co-portfolio managers of BLOK.
Having regulations in place within the U.S. would both provide clarity for the industry and address uncertainty that investors might have around risk within the space related to its current lack of regulations.
“Studies may take 180 days to complete, but having the clock start ticking on this important issue will offer the benefit of clarity for many in the industry,” the authors write.
The perceived coordinated effort by major crypto exchanges to align with sanctions set by the U.S. National Security Council against Russian individuals and entities has also been a boon, highlighting the transparent nature of most bitcoin and crypto trades. Exchanges such as Coinbase have come forward, explaining their vetting processes when users register, as well as the amount of data that they collect, analyze, and filter to capture the bad actors within crypto and all of their related crypto wallets.
In addition, the creation of a CBDC would work to bring definition to stablecoins as well, which are cryptocurrencies whose market values are pegged to real-world assets, such as gold or the U.S. dollar. Silvergate Capital, a major holding within BLOK, is currently positioned positively as a potential leader within the space. Silvergate acquired Meta’s Diem, a stablecoin payment system, last month and plans to utilize the technology to launch its own stablecoin payment service later in the year.
See also: Silvergate Capital Using Latest Acquisition for Stablecoin Launch
“The fund increased 2.07% in February following two prior months of decline. Silvergate, Overstock, and Stronghold were the biggest contributors to the fund’s performance during the month,” write the authors. “Regulations are in the spotlight that will offer clarity on many important issues. This is since clarity is what the market broadly needs.”
Investing in Crypto’s Innovation With BLOK
For investors who want access to the growing crypto space with diversified exposure, the Amplify Transformational Data Sharing ETF (BLOK) can be a great solution.
BLOK currently has $1 billion in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.
The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.
BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of December, top allocations within the blockchain industry included transactional at 38.0%, crypto miners at 23.0%, and venture at 11%. BLOK invests across the blockchain landscape, in miners, exchanges, and developers.
Silvergate Capital Corp (SI) is carried within the fund at a 4.54% weight.
BLOK has an expense ratio of 0.71% and currently has 46 holdings.
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