Charles Schwab’s asset management arm launches crypto-linked ETF

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Schwab Asset Man­age­ment, the asset man­age­ment arm of finan­cial giant Charles Schwab, has launched an exchange-trad­ed fund (ETF) with expo­sure to firms linked to cryptocurrencies. 

In a Fri­day announce­ment, Schwab said its Cryp­to The­mat­ic ETF was expect­ed to be avail­able for trad­ing on the New York Stock Exchange’s Arca under the tick­er STCE on Aug. 4. The fund tracks Schwab’s Cryp­to The­mat­ic Index, pro­vid­ing an invest­ment vehi­cle with expo­sure to com­pa­nies “that may ben­e­fit from the devel­op­ment or uti­liza­tion of cryp­tocur­ren­cies and oth­er dig­i­tal assets.”

Like­ly because the Unit­ed States Secu­ri­ties and Exchange Com­mis­sion, or SEC, has not giv­en the green light to ETFs pro­vid­ing direct expo­sure to Bit­coin (BTC), the Schwab fund will indi­rect­ly invest in cryp­to through com­pa­nies. Schwab said the firms includ­ed those involved in min­ing and stak­ing as well as those devel­op­ing appli­ca­tions on the blockchain or dis­trib­uted ledger technology.

“For investors who are inter­est­ed in cryp­tocur­ren­cy expo­sures, there is a whole ecosys­tem to con­sid­er as more com­pa­nies seek to derive rev­enue from cryp­to direct­ly and indi­rect­ly,” said David Bot­set, Schwab Asset Management’s man­ag­ing direc­tor and head of equi­ty prod­uct man­age­ment and innovation.

The antic­i­pat­ed launch of the cryp­to-linked ETF fol­lowed the firm announc­ing a Cryp­to Econ­o­my ETF in March. Accord­ing to Schwab, the expo­sure to com­pa­nies deal­ing in cryp­tocur­ren­cies between the two funds would be sim­i­lar — while the for­mer would track the firm’s Cryp­to The­mat­ic Index, the lat­ter would invest “at least 80% of its net assets” for com­pa­nies list­ed on its Cryp­to Econ­o­my Index.

Relat­ed: Grayscale reports 99% of SEC com­ment let­ters sup­port spot Bit­coin ETF

The SEC has not approved spot Bit­coin ETFs — those direct­ly invest­ing in the cryp­tocur­ren­cy — in the Unit­ed States. How­ev­er, some asset man­age­ment firms in the U.S. have launched ETFs offer­ing indi­rect expo­sure to cryp­to through futures con­tracts, and Cana­di­an reg­u­la­tors first approved a Bit­coin spot ETF from Pur­pose Invest­ments in Feb­ru­ary 2021.

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