Schwab Asset Management joins firms offering crypto ETFs

Asset manager launches its first crypto related exchange-traded fund

Schwab Asset Management’s STCE index currently comprises of crypto-related firms, such as MicroStrategy and Coinbase – Photo: Shutterstock

The asset management arm of the Charles Schwab Corp will start trading its crypto-related exchange-traded fund (ETF) this week. 

Schwab Asset Management, which reports to have more than $655bn (£539bn) in assets under management, revealed last week the Schwab Crypto Thematic Index (STCE), which will trade on the New York Stock Exchange. 

The objective of its first crypto-related ETF will be to track an index “that is designed to deliver global exposure to companies that may benefit from the development or utilisation of cryptocurrencies (including Bitcoin) and other digital assets, and the business activities connected to blockchain and other distributed ledger technology.”

No direct exposure to the crypto market

Although crypto-related, STCE will not have straight exposure to the cryptocurrency market. The company maintained that “the fund will not invest in cryptocurrency or digital assets directly” and “will not invest in initial coin offerings” (ICOs). 

However, it may “have indirect exposure to cryptocurrencies by virtue of its investments in operating companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments, or through other non-principal investments held by the fund.”

The companies constituting the index currently include Bitcoin-bull MicroStrategy, crypto miner Riot Blockchain and the prominent US exchange Coinbase. The stock prices of these companies have fallen by 48%, 67% and 75%, respectively, since the start of the year. 

David Botset, managing director and head of equity product management and innovation at Schwab Asset Management, said: “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.”

Range of cypto-linked ETFs continues to expand

Recent months have seen a rise in new crypto-related ETF offerings. ProShares recently launched the first short Bitcoin ETF in the United States, allowing investors to capitalise on the cryptocurrency’s recent downward momentum. 

However, the US Securities and Exchange Commission (SEC) has continued to resist approving a Bitcoin spot ETF despite giving a range of Bitcoin futures ETFs the green light. The regulator was even sued by the leading digital asset manager Grayscale in June for rejecting its application to convert its Bitcoin trust into a spot ETF.

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