Bitcoin ETFs have gotten the thumbs down from SEC regulators, but ETFs based on their underlying technology are alive and well. Two brand new blockchain ETFs – the Amplify Transformational Data Sharing ETF (BLOK) and the Reality Shares Nasdaq NextGen Economy ETF (BLCN) – both debuted this week amid a lot of hype, a fair amount of concern from the SEC and some questions surrounding exactly how the two funds are different.

You’ll notice right off the bat that neither fund has the word “blockchain” in its name. That’s not by accident, as the SEC came in at the last minute and asked both providers to rename their funds or risk delaying their launch. The SEC’s concern is understandable. In recent weeks, we’ve seen a number of companies make strategic 180 degree turns, add “Blockchain” to their name and see their stock prices skyrocket by several hundred percent. The SEC’s primary concern is that investors are going to invest in a product they don’t really know much about just because it has “Blockchain” in the name, and put themselves at substantial risk of losses. The other concern is that these funds aren’t pure blockchain plays. Both of these funds have names, such as Intel (INTC), JPMorgan Chase (JPM) and Microsoft (MSFT), in their portfolios. While these companies are indeed developing blockchain-related technology, it’s a very small part of their overall business model at the current moment. That being said, the two funds are still being warmly received by investors. Combined, the two funds are going to near $40 million in shares traded on their opening day, and well over that on their second.

At first blush, it might seem like the biggest differentiator between the two funds is that BLOK is actively managed and BLCN is a passive index fund. While that’s true, the two portfolios are actually quite different and they go about selecting names for them in distinct ways. According to Bloomberg, the two funds only have 61% overlap in assets, and both have their individual sources of risk. BLCN has a much larger percentage of assets dedicated to overseas companies, while BLOK has much more invested in small caps.

Source: Bloomberg

To better understand how these two blockchain ETFs compare and contrast, let’s break down each one.

Reality Shares NexGen Economy ETF (BLCN)

BLCN is benchmarked to the Reality Shares NexGen Economy Index, an index that selects and weights companies according to its proprietary Blockchain Score. In short, the index looks to include only those companies which have made a meaningful investment and commitment to blockchain technology development, and avoid those companies which have made radical strategic pivots to blockchain, but have yet to really commit to the space.

The Blockchain Score is developed by looking at seven distinct factors. Some of these factors include the number of blockchain-related patents or corporate filings issued by companies, the presence in the blockchain community through institute memberships, such as the Ethereum Enterprise Alliance, and the overall potential impact to the blockchain economy. In other words, you won’t (yet) find names, such as Riot Blockchain (RIOT), Kodak (KODK) or Long Blockchain (LBCC), anywhere in this portfolio.

Look at the composition, though, and one trend remains clear.

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