Amplify Plans Blockchain Leaders ETF

November 02, 2017

Amplify ETFs, the firm founded by Christian Magoon, has made the first filing for an ETF that will specifically target companies that participate in the use and development of blockchain technology.

The actively managed Amplify Blockchain Leaders ETF will focus on the companies that are most likely to benefit from the blockchain phenomenon.

Blockchain is the technology that is devoted to the preservation of transaction records and, most notably, underlies the bitcoin cryptocurrency. Transaction data is stored in “blocks” that constitute links in a “chain,” which forms a secure and accessible record of the transactions that have taken place.

The fund will seek to outperform an index developed by Emerita Capital Indices and EQM Indexes. The index identifies companies as blockchain companies if they fulfill certain criteria, the prospectus said.

They must be actively involved in the development or use of blockchain technology or be partnered with a firm that is involved in the blockchain development or use. Companies can also be included if they benefit financially from blockchain-based applications, including cryptocurrencies and the mining of them, or are part of a group or consortium focused on the exploration of blockchain technology usage.

While the ETF doesn’t explicitly seek to invest in bitcoins, it may invest in ETFs that invest in blockchain-based applications like digital commodities, e.g., bitcoin ETFs.

Interesting Twist

It’s an interesting twist in the ongoing effort by issuers to open access to bitcoins in an ETF wrapper somehow.

Earlier this year, VanEck pulled the plug on its proposed bitcoin ETF, at the request of regulators, who asked the issuer to wait until the underlying security of the proposed ETF—bitcoin futures—actually launched. Other issuers, who have been throwing their hats in the race to be first to market with a bitcoin ETF, followed suit.

Bitcoin futures are expected to launch in the fourth quarter of the year, with the Chicago Mercantile Exchange and Cboe Global Markets both looking to bring the first-of-their-kind futures contracts. Cboe owns ETF.com.

For now, access to bitcoin in an ETF can be only be found in the ARK Web x.0 ETF (ARKW) and the ARK Innovation ETF (ARKK), both of which have small allocations to bitcoins obtained through publicly traded shares of Grayscale’s Bitcoin Investment Trust (OTCQX: GBTC).

The filing did not include a ticker or expense ratio, but it did indicate the fund will list on the NYSE Arca.

Contact Heather Bell at hbell@etf.com.

 

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