Schwab Taps ‘Crypto Ecosystem’ With Latest ETF

The asset manager has traditionally shied away from sector-specific funds.

Schwab Asset Management Inc. is set to launch a crypto-focused exchange-traded fund in August, marking the first thematic fund for an asset manager that has traditionally shied away from sector-specific funds. 

The Schwab Crypto Thematic ETF (STCE) will launch on Aug. 4, according to a company statement released Friday.  

The new fund will track Schwab Asset Management’s Schwab Crypto Thematic Index, which gives investors exposure to companies that may benefit from crypto development and adoption. The index relies on a combination of “human insight” and artificial intelligence, by using technology acquired through its purchase of the direct-indexing provider Motif two years ago, the company said. 

The debut follows offerings from Fidelity and BlackRock Inc. that have blockchain and crypto exposure. The Fidelity Crypto Industry and Digital Payments ETF (FDIG) debuted in April, which is down 27.50% over the past three months. And BlackRock also listed its iShares Blockchain and Tech ETF (IBLC) in April; its biggest allocation is to Coinbase. IBLC is down 27.49% over the last three months, according to ETF.com data. 

Schwab, which filed for the launch back in March, touts the latest offering as “the lowest cost crypto-related ETF available to investors today,” with an expense ratio of 0.30%. For comparison, FDIG has an expense ratio of 0.39% and IBLC of 0.47%.  

“The Schwab Crypto Thematic ETF seeks to provide access to the growing global crypto ecosystem along with the benefits of transparency and low cost that investors and advisors expect from Schwab ETFs,” said David Botset, head of equity product management and innovation at Schwab Asset Management. There is a “whole ecosystem to consider as more companies seek to derive revenue from crypto directly and indirectly,” he added. 

The fund will not offer direct exposure to crypto, digital or initial coin offerings, according to the filing. 

“The fund may, however, have indirect exposure to cryptocurrencies by virtue of its investments in companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments,” according to the filing. 

The dominant ETF players, as well as smaller issuers, are increasingly embracing the crypto space in response to market demand, despite regulatory uncertainty and the latest downturn in the cryptomarkets. 

Contact Daria Solovieva at [email protected]