The nine US crypto-based ETFs sitting on the edge of the dance floor awaiting their turn are referenced in our interview with BNY Mellon’s Ben Slavin. His firm is servicing the bitcoin ETF application to the SEC from First Trust and Skybridge and has been involved in supporting other crypto ETF applications in the past. Slavin says: “The queue is forming rapidly and there is a long history with respect to these filings and a renewed sense of optimism that the SEC will approve these products, given the change in the Administration and also the market structure changes around digital assets.”
The development of proper, institutional quality market structure for digital assets has definitely been a key driver in the growth of the sector, and this can be seen in the first listing of a cryptocurrency exchange, Coinbase, which this week was valued at USD76 billion in what many see as a validation of the whole digital asset class, just some 12 years after the creation of bitcoin.
The listing makes Coinbase worth more than ICE, the parent company of the New York Stock Exchange.
Words of caution on the whole burgeoning crypto sector have come from all sides with Adrian Lowcock, Head of Personal Investing at the UK’s investment platform Willis Owen, commenting on the Coinbase IPO, warning: “Investors need to tread carefully. No matter what the asset class, bubbles can form quickly and are usually driven by people’s emotions and behaviour – not rational decision making. Indeed, today’s IPO could mark the peak for cryptocurrencies, at least in the short-term.”
Fear of missing out drives a great deal of the investment activity behind cryptos and who couldn’t be tempted by what Allan Lane, co-founder of Algo-Chain, found on his ETF Play List this week: the over 1,000 per cent return year to date of 21Shares’ Binance ETP on the Swiss SIX Stock Exchange. Investors seem to think that Binance might be one of the next digital asset platforms to IPO,” Lane comments.
It’s hard to get away from crypto at the moment, and even in the flows’ stories this month, we find that crypto beat gold in ETP flows over March according to TrackInsight, but BlackRock reports another record month of inflows overall and manages not to mention the crypto phenomenon at all.
Meanwhile, BlackRock’s chiefs in the wealth sector report that in the UK, where we can’t buy any investment products attached to crypto assets at the moment, the use of index tracking investment products, including ETFs, is likely to double over the next four years. Brace yourselves for when and if the UK’s FCA revisits its decision on crypto investment products.
It’s all good news for the ETP industry globally, and focusing on the UK, the 19th April sees ETFs represented in the Investment Association’s sectors, a move of which Laith Khalaf, financial analyst at AJ Bell, comments: “The inclusion of ETFs in the Investment Association sectors may sound like an arcane technical development, but it marks another step into the mainstream for ETF investing in the UK. It will bump up the visibility and comparability of ETFs, and provide a further competitive challenge to active funds and index trackers.”
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Managing Editor, ETF Express
Companies in this issue
The Investment Association
Pacific Asset Management
SIX Stock Exchange
TD Asset Management