Major financial institutions and high-level professional investors have mostly dipped their toes into the world of cryptocurrency.
However, their enthusiasm for blockchain technology and its various applications is more palpable and that could be a long-term plus for exchange traded funds such as the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
At a time when some of the biggest names in the ETF space, which are also some of the largest financial services companies overall, are filing plans for spot bitcoin ETFs, blockchain technology is quietly gaining more traction among large-cap financial services firms. That includes several members of the BLKC portfolio.
BLKC Levered to Blockchain Adoption
BLKC, which tracks the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index, has ample ties to crypto via the Grayscale Bitcoin Trust (GBTC) and stakes in a variety of bitcoin miners. However, a nearly 20% weight to financial services equities defrays some of that risk. This also gives the ETF more of a value feel than meets the eye. Plus, there are other benefits.
“JPMorgan Chase & Co. last month expanded its blockchain-based payments platform to allow corporate clients to use euros, and the bank is exploring ways to expand an asset tokenization platform that has already traded more than $785 billion of notional value. Goldman Sachs Group Inc. is looking to increase issuance of tokenized securities through the digital-asset platform it launched in November,” reported Bloomberg.
Dow components JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) combine for 2.61% of the BLKC portfolio. The growing market for tokenizing various digital assets underscores why those banks and other traditional financial firms residing in BLKC see value in bolstering their blockchain capabilities.
“Instead, the focus is on how real-world assets can be converted into digital tokens to create trading efficiencies and develop new opportunities that blockchains and smart contracts allow. Analysts at Citigroup Inc. estimate that by 2030, there will be as much as $5 trillion of tokenized private-sector securities and funds,” added Bloomberg.
Another area where blockchain is making inroads in the financial services space is enhancing efficiency in payments. Said another way, everyone likes receiving their money faster, and blockchain has the capability to make that happen.
Whether its younger fintech firms such as Block (NYSE: SQ) and PayPal (NASDAQ: PYPL) or old guard financial institutions, multiple BLKC member firms answer the reduced payments friction bell.
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