First Trust Plans Blockchain ETF

November 14, 2017

First Trust has jumped on the blockchain trend with its most recent filing, joining firms like Reality Shares and Amplify ETFs. The First Trust Indxx Blockchain ETF is slated to list on the Nasdaq stock exchange.

The fund will track an index provided by Indxx that covers developed and emerging markets, and screens out companies that do not meet liquidity and size requirements. Eligible companies must have at least $200 million in market capitalization, average daily trading volume of at least $1 million, and free float of at least 10% of their total market capitalization.

From there, the methodology sorts the companies into three tiers based on their exposure to blockchain technology, and equally weights them within their respective tiers.

  • The “Active Users” tier is weighted at 50% of the index, and includes companies using blockchain technology or offering products based on it.
  • The “Active Supporters” tier is weighted at 30% of the index, and covers companies funding or supporting another company or affiliate’s use and development of blockchain technology; companies in this category can simply have a press release on their website that says they are working with blockchain technology, the prospectus says.
  • Finally, the “Active Explorers” tier is weighted at 20% of the index, and can include companies that have disclosed that they are actively exploring the usage of blockchain technology.

Blockchain is a method of storing transaction data that is an instrumental technology driving the bitcoin cryptocurrency.

The filing did not include a ticker or expense ratio.

Contact Heather Bell at [email protected]

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