Corporate Moves in Crypto Could Be Fabulous for This Fintech ETF

Bitcoin is in a funk. That’s not up for debate, but recent weakness in the world’s largest cryptocurrency doesn’t diminish the long-term use case for it.

Nor are fintech companies running away from Bitcoin. That could prove fruitful for exchange traded funds like the ARK Fintech Innovation ETF (NYSEARCA: ARKF).

For example, Square (NYSE: SQ), ARKF’s largest holding at a weight of 10.35% recently said it’s building a new Bitcoin-linked unit. In a tweet, CEO Jack Dorsey said the company is “building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services.”

That jibes with Dorsey’s long-standing goal of transforming Square into a larger, broader enterprise. Currently, the fintech company’s core businesses are Cash App, Square Seller products, and the music-streaming service Tidal, according to Bloomberg. Cash App, which initially started as a money transfer avenue and alternative to traditional banks, allows users to buy, sell, and hold Bitcoin and stocks.

Square’s success in the new Bitcoin venture could be important to ARKF’s fortunes because the fund is the largest ETF owner of the stock. Two other ARK funds – the flagship ARK Innovation ETF (NYSEArca: ARKK) and the ARK Next Generation Internet ETF (NYSEArca: ARKW) – are also among the top 10 ETF holders of Square stock.

In other crypto-related news, PayPal (NASDAQ: PYPL) said Thursday users can now buy up to $100,000 worth of Bitcoin and select other cryptocurrencies per week, up from a previous limit of $20,000. The company is also doing away with its $50,000 annual limit. Bitcoin cash, ether, and Litecoin are the other digital coins available on PayPal.

“These changes will enable our customers to have more choice and flexibility in purchasing cryptocurrency on our platform,” Jose Fernandez da Ponte, PayPal’s vice president, blockchain, crypto and digital currencies, said in a statement issued on Thursday.

As of July 15, PayPal is ARKF’s third-largest holding at just over 5%. The fund is further levered to elevated crypto transactions by way of its 3.31% allocation to crypto exchange operator Coinbase (NASDAQ: COIN).

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.