As regulators delay approval of a U.S. Bitcoin ETF, issuers are getting creative in order to provide investment opportunities in crypto-linked equities.
Invesco is the latest issuer filing with the SEC to launch two “crypto-lite” ETFs: the Invesco Galaxy Crypto Economy ETF and the Invesco Galaxy Blockchain Economy ETF.
The Invesco Galaxy Crypto Economy ETF would track the the Alerian Galaxy Global Cryptocurrency Focused Blockchain Index, which is primarily comprised of cryptocurrency miners, cryptocurrency-enabling technologies, and cryptocurrency buyers.
To be eligible for inclusion in the equity component of the Index, stocks must meet minimum capitalization and average trading volume requirements, including a minimum three-month average daily volume of $1 million or more.
Interestingly, the index also includes exposure to cryptocurrency futures and exchange-traded products that are linked to cryptocurrencies. The futures component, which would consist of no more than 10% of the index, would be represented by front-month CME cryptocurrency futures with more than $10 million in open interest. The ETF would obtain this exposure to cryptocurrency futures indirectly through a wholly-owned Cayman Islands subsidiary.
Meanwhile, the ETP component, which would represent 5% of the index, would invest in ETNs and ETFs listed outside of the U.S., as well as private investment trusts tracking cryptocurrencies.
Meanwhile, the Invesco Galaxy Blockchain Economy ETF would track the Alerian Galaxy Global Blockchain Index, which is comprised of “stocks of companies materially engaged in the development of blockchain technology, cryptocurrency mining, cryptocurrency buying, or enabling technologies.” Like the Invesco Galaxy Crypto Economy ETF, this fund may also invest in cryptocurrency futures and exchange-traded products, as well as private investments linked to cryptocurrencies.
The Invesco Galaxy Blockchain Economy ETF has the same eligibility requirements as the proposed Invesco Crypto Economy ETF and would use the same Cayman Islands subsidiary to invest in futures contracts.
Both of the proposed funds would be managed by a team of portfolio managers and investment specialists comprised of Peter Hubbard, David Hemming, Michael Jeanette, Theodore Samulowitz, Pratik Doshi, and Tony Seisser, who will all be jointly and primarily responsible for the management of the Fund.
The regulatory filing does not list a management fee or ticker.
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