Starting today, The Toronto Stock Exchange will list a new blockchain based ETF on their platform.
ETF, which stands for ‘Exchange traded fund’ is “a marketable security that tracks an index, a commodity, bonds, or a basket of assets”. Unlike mutual funds, an ETF trades like a common stock on a stock exchange, and experience price changes throughout the day as they are bought and sold.
The Horizons Blockchain Technology and Hardware Index ETF, which will join similar ETF’s from Harvest Portfolio Group Inc. and Evolve Funds Group Inc, aims to differentiate itself by backing companies such as Hive Blockchain Technologies Ltd, Nvidia Corp, Digital Realty Trust Inc etc which develop hardware and services which power the blockchain technology.
In an interview with Bloomberg Steve Hawkins, co-chief executive officer of Horizons ETFs Management Canada Inc, said “We don’t know which individual blockchain companies are going to work, we have no idea what the extent of the blockchain applications will be, but we do know people will have to invest in the infrastructure to build out blockchain,”.
Earlier in March 2017, the Winklevoss brothers tried to list Bitcoin ETFs on exchanges, but the SEC rejected their proposal. Later in December, with the introduction of Bitcoin futures on two exchanges in the United States, many were expecting ETFs to get the stamp of approval. However, five funds were requested to withdraw their proposals by SEC officials.
The ETF hopes to offer an opportunity to investors who want to invest in the infrastructure which supports the blockchain technology rather than the new blockchain startups or cryptocurrencies. Bitcoin-based ETF’s Ark Web x.0 ETF (ARKW) and the Ark Innovation ETF (ARKK) were the best performing ETF’s of 2017.
The Winklevoss twins tried to list Bitcoin tied ETF’s on their exchange earlier in March this year but the SEC rejected their proposal citing “the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”. However, the Winklevoss twins were granted a patent to establish ETF’s tied to cryptocurrencies recently.
Cryptocurrency Exchanges such as Huobi Pro and OKEx also launched cryptocurrency-based ETF’s earlier this month. OKEx’s ETF combines the tokens which are among the top 10 percent in terms of 30-day average trading volume against tether on their platform. Similarly, Huobi Pro that indexed 10 cryptocurrencies based on the market valuation and trading on their platform. It is evidently clear that there is an increased interest in blockchain technology and cryptocurrencies among traditional and institutional investors.