The Case for Cryptocurrency: Six Executives Testify | ETF Trends

Six of the crypto world’s top executives testified yesterday before the House Financial Services Committee in defense of cryptocurrencies and blockchain innovation.

The meeting was called by Rep. Maxine Waters (D., California) in efforts by Congress to better understand digital assets and how current regulations might apply to the crypto space, reports the Wall Street Journal.

“Currently, cryptocurrency markets have no overarching or centralized regulatory framework, leaving investments in the digital-asset space vulnerable to fraud, manipulation and abuse,” Waters said on Wednesday.

Among those summoned were top executives from Circle Internet Financial Ltd, a stablecoin issuer; Coinbase Global Inc. and FTX Trading Ltd, both popular cryptocurrency exchanges; Bitfury Group Ltd, a bitcoin mining company; Stellar Development Foundation, which takes cryptocurrency payments; and Paxos Trust Co, a blockchain company.

Opinions about crypto seemed divided from the members of Congress questioning the executives. Some members of the committee seemed to side with encouraging the growth and innovation that crypto can provide, while others sought to better understand the potentials for abuse within the system and the lack of protections inherent.

On their end, the executives encouraged the development of new regulation that would be tailored to the unique nature of digital assets, and also argued for some of the benefits that cryptocurrencies can offer, such as saving money via remittance fees.

“Because of their nascent stage of development and unique underlying technology, digital assets trade in markets that are fundamentally different from traditional financial markets,” Coinbase CFO Alesia Haas said in her testimony. “As a result, existing regulatory regimes often do not accommodate this new technology.”

FTX’s CEO Sam Bankman-Fried argued for one of the core tenants that many who support crypto ascribe to: The regulated financial institutional system is not an option for everyone, nor is being part of it desired by a growing number of people.

“When you look at the number of people who are underbanked or unbanked, both in the United States and globally, it’s indicative of a system that does not work for everyone,” Bankman-Fried said. “This is a product of the intermediation involved, it’s a product of how the larger institutions have evolved, and it’s a product of payments infrastructure that is difficult and clunky enough to use that it just does not work for most people.”

For now, the space remains unregulated within the U.S., and as lawmakers grapple with how to approach it, Rep. Patrick McHenry cautioned that overregulating could be detrimental to the U.S. being a global leader within the space.

“That fear of the unknown and the move to regulate before understanding will only stifle American ingenuity and put us at a competitive disadvantage,” he said.

Investing in Innovation With Invesco’s BLKC

For investors looking to gain exposure to the innovation and growth potential within crypto, the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC) is an excellent option.

The fund invests in companies that are developing blockchain, mining cryptocurrency, buying cryptocurrencies, or else enabling technologies, exchange traded products (ETPs), and private investment OTC trusts tied to cryptocurrency.

BLKC is based on the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index. The index is divided into two categories. One category includes companies that develop blockchain, mine or buy cryptocurrency, or have enabling technologies, all of which are equally weighted and collectively constitute 85% of the index. The other category consists of ETPs and private investment trusts that are traded OTC and are linked to cryptocurrency, all of which collectively constitute 15% of the index.

As of now, the only ETP that BLKC invests in is the Grayscale Bitcoin Trust BTC (GBTC).

The fund does not invest directly in cryptocurrencies or crypto assets, and it does not invest in initial coin offerings or futures contracts on any cryptocurrencies. It can gain exposures for the ETP portion of investments through a wholly owned Cayman Islands subsidiary, which helps to alleviate the tax burden of a K-1.

Top holdings include Grayscale Bitcoin Trust (GBTC) at 13.40%, QUALCOMM Inc (QCOM) at 1.78%, and Intuit Inc (INTU) at 1.72%.

BLKC has an expense ratio of 0.60% and 63 holdings.

For more news, information, and strategy, visit the Crypto Channel.