An Analysis of Crypto Equity ETFs

Crypto equity ETFs present an alternative for investors looking for crypto exposure, as investors still face hurdles to directly interact with crypto markets. Current investment vehicles have limitations ranging from market tracking to mandate flexibility and compliance. With spot Bitcoin ETFs plagued by regulatory uncertainty, it is hard for investors to find suitable alternatives. Crypto equity ETFs seek to capitalize on this interest by offering an easier path for investors to obtain digital asset exposure within their portfolios. These range from direct digital asset participants like digital asset exchanges and crypto mining firms ($COIN, $RIOT, $MARA, $HUT) to secondary indirect participants with digital asset exposure ($CME, $SQ, $NVDA, $HOOD).

Over the last few years, crypto companies started going public. This brought on new opportunities for increased exposure, particularly evident in the "Amplify Transformational Data Sharing ETF" (BLOK), the oldest running crypto-focused ETF. Originally launched in January 2018, BLOK consisted of a spectrum of technology-focused equities, but over time it adopted more digital asset companies, becoming one of the most correlated ETFs with Bitcoin itself. BLOK is the largest crypto-focused ETF by AUM at $649m as of the 13th of May '22.