Active Blockchain ETF Launches

Today, REX Shares launched the REX BKCM ETF (BKC), an actively managed blockchain ETF managed by well-known cryptocurrency expert Brian Kelly.   

BKC invests in companies involved in the "blockchain ecosystem," a term that covers a wide range of cryptocurrency- and enterprise blockchain-related businesses. In the portfolio are companies that:

• Mine or trade cryptocurrency, or provide trading venues for cryptocurrencies
• Promote the mainstream adoption of cryptocurrencies
• Build the software or hardware used by cryptocurrency and blockchain users
• Employ blockchain technology in financial transactions
• Develop and/or use blockchain technology for enterprise solutions 

BKC will hold roughly 30 companies at launch, making it a more concentrated play than other blockchain ETFs. It will also skew more heavily toward small-caps and Asian companies.

But what truly sets BKC apart is its active manager, Brian Kelly. An investor in bitcoin since 2013, he is one of cryptocurrency's leading authorities and advocates. Kelly authored “The Bitcoin Big Bang” and is a regular contributor to CNBC's "Fast Money." In addition, his firm, BKCM LLC, manages a diversified cryptocurrency long/short hedge fund.  

Cayman Islands Workaround

Intriguingly, BKC also reserves the right to place up to 25% of its allocation in a Cayman Islands subsidiary. A workaround common in the commodity space, this structure allows an ETF to invest in futures without incurring the nuisance of a Schedule K-1 tax form.

That BKC reserves this right suggests that, at some future point, the fund may allocate some portion of its portfolio to cryptocurrency futures, such as bitcoin futures, or perhaps in the Bitcoin Investment Trust (GBTC).

REX Shares, BKC's sponsor, is no stranger to exotic funds. Other REX ETFs include a set of actively managed long and short VIX futures ETFs, as well as a set of 3x leveraged long and short tech stock funds, focusing on so-called FANG companies.

BKC, which lists on the NYSE Arca, charges an expense ratio of 0.88%.

Contact Lara Crigger at [email protected]