Charles Schwab Unveils New Crypto ETF
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The battle over crypto-based exchange-traded funds (ETFs) continues, and now it looks like Charles Schwab — one of the world’s largest financial institutions — is getting involved and earning a few points in the process.
Charles Schwab gets involved in crypto
Not long ago, Charles Schwab Asset Management announced plans to launch the Schwab Crypto Thematic ETF (STCE). The product allows investors and clients of the institution to gain indirect exposure to crypto-assets. Charles Schwab says that many of its customers have been demanding more access to digital currencies in recent years, and this is the bank’s attempt to comply despite current (negative) price trends.
David Botset – who has been directly involved in the product’s launch – explained in a statement:
It is a highly speculative investment, but we see certain segments of Schwab investors wanting access to this asset class in their portfolios.
For the longest time, crypto investors have pushed institutions to unveil new crypto-based ETFs because they believe Bitcoin is much more stable and capable of growing than other commodities (i.e. copper) on which current ETFs are based. While many companies have tried to make this happen, the road has come with a wide variety of obstacles, the biggest of which is the Securities and Exchange Commission (SEC).
The agency has repeatedly rejected applications from companies seeking to establish bitcoin-based ETFs, arguing that the asset is too volatile and therefore does not require serious attention. The SEC says it’s doing customers a favor by reducing their ability to participate in BTC, but many traders don’t see things that way.
To some extent, a bitcoin-based ETF has been released through a company called Pro Shares. The product was born last year, and while it has earned praise, many feel that it is not as strong as it is made out to be, as it focuses on futures rather than actual, physical bitcoins that can be traded on the spot.
The Schwab Crypto Thematic ETF differs from other crypto-related ETFs on the market in that the index identifies, selects and weights constituents based on a company’s importance 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 invested in the product. Botset mentioned that the product is very cheap and commented:
We think our approach of combining human insight with artificial intelligence and models to assess companies’ exposure to the crypto theme is different.
The product works quite well
The reason for keeping costs low is to enable small businesses to participate in trading.
Since its initial launch at the beginning of last month, the product has risen almost five percent.