Charles Schwab, an American financial services firm, has registered to establish a Crypto Economy exchange-traded fund (ETF). Schwab Strategic Trust filed an SEC prospectus for a Schwab Crypto Economy ETF yesterday.
With its link with the Charles Schwab name, this would be a large incumbent’s second foray into the crypto field.
The investment vehicle attempts to provide exposure to investment vehicles that may profit from cryptocurrency adoption. The fund will invest 80 percent of its assets in shares from the Schwab Crypto Economy Index.
It is important to note that the Crypto Economy ETF will not invest directly in cryptocurrencies such as Bitcoin and Ethereum.
There are already eight comparable products in the United States, but the Securities and Exchange Commission has yet to approve an ETF that follows the value of real cryptocurrencies, after rejecting a flurry of applications in recent months.
Charles Schwab Files Crypto Economy ETF
It intends to construct the Schwab Crypto Economy Index, which will serve as the foundation for the ETF.
The index will indeed cover publicly traded equities in the cryptocurrency industry, such as exchanges, companies engaged in cryptocurrency mining or staking, and companies developing blockchain or crypto applications.
It wouldn’t be the first such ETF, but if it goes forward, it may be the first with such a well-known name. Goldman Sachs also submitted an ETF prospectus in July of last year, but has yet to release one for cryptocurrency.
Other major retail investment firms, such as Fidelity, have been participating in the crypto industry for years, but not in the form of ETFs. Of course, Robinhood provides crypto exposure. However, some incumbents are still hesitant to get engaged.
For example, a Schwab blog post in mid-November last year concluded, “While some traders have made money on the change in the price of Bitcoin or other cryptocurrencies (and many others have lost money).
We probably recommend that almost all investors respect people as a speculative investment primarily for buying and selling with money outside of a traditional straight portfolio.”
Vanguard, the largest ETF provider, is even more concerned. “Because cryptocurrencies are very speculative in their current condition, Vanguard feels their long-term investment case is poor,” it stated in September. However, in the crypto industry, a few of months is a long time, and the situation may quickly change.
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