The battle for a crypto-based exchange-traded fund (ETF) is still occurring, and now it looks like Charles Schwab – one of the world’s largest financial institutions – is getting involved and earning a few winning marks in the process.
Charles Schwab Is Getting Involved in Crypto
Not long ago, Charles Schwab Asset Management announced plans for what it’s calling the Schwab Crypto Thematic ETF (STCE). The product will allow investors and clients of the institution to gain indirect exposure to crypto assets. Charles Schwab says that many of its customers have been demanding increased access to digital currencies in recent years, and this is the bank’s attempt to comply regardless of current (negative) price trends.
David Botset – who’s been directly involved in the product’s launch – explained in a statement:
It is a very speculative investment, but we are seeing certain segments of Schwab investors that are seeking access to this asset category in their portfolios.
For the longest time, crypto investors have been putting pressure on institutions to unveil new crypto-based ETFs given that they feel bitcoin is far more stable and capable of growth than other commodities (i.e., copper) that present ETFs are based on. While many companies have tried to make this happen, the road has come with a wide array of barricades, the biggest one being the Securities and Exchange Commission (SEC).
The agency has repeatedly denied applications from companies looking to set up bitcoin-based ETFs, claiming that the asset is too volatile and thus does not warrant serious attention. The SEC says that it’s doing customers a favor by reducing their opportunities to get involved in BTC, but many traders do not see things this way.
To an extent, a bitcoin-based ETF has been released through a company called Pro Shares. The product came about last year, and while it has earned praise, many feel it’s not as strong as it could be given it’s centered on futures rather than real, physical bitcoins that can be spot traded.
Botset continued with:
The Schwab Crypto Thematic ETF is different from other crypto-related ETFs on the market today in the way that the index identifies, selects, and weighs constituents based on a company’s relevance to the crypto ecosystem using natural language processing.
At the time of writing, some of the world’s biggest crypto names – including MicroStrategy, Robinhood, Riot Blockchain, Coinbase, and Marathon Digital – have put money into the product. Botset mentioned that the product is extremely low-cost, commenting:
Our approach of combining human insight with AI and in models to assess companies’ exposure to the crypto theme, we think, is differentiated.
The Product Is Doing Quite Well
The reason for keeping costs low is to allow small companies to get involved in trading.
Since its initial launch early last month, the product is up nearly five percent.