Invesco Pairs With Novogratz’s Galaxy on Crypto-Flavor ETFs
Invesco Ltd.’s newly formed partnership with crypto billionaire Michael Novogratz’s Galaxy Digital Holdings Ltd. is already bearing fruit in the form of two new exchange-traded funds.
The Invesco Alerian Galaxy Crypto Economy ETF (ticker SATO, in a nod to Bitcoin’s mysterious founder, Satoshi Nakamoto) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC) begins trading Thursday on Cboe Global Markets. The ETFs are passively managed, rebalanced monthly and charge an expense ratio of 0.60%.
Roughly 80% of SATO’s portfolio is dedicated to companies that derive more than 50% of their performance from cryptocurrency activities, such as mining companies, crypto infrastructure builders and crypto-buying companies. BLKC invests in largely the same companies, but also tracks firms engaged in blockchain technology that aren’t necessarily tied to cryptocurrency. Additionally, both firms have 15% of their holdings in shares of the Grayscale Bitcoin Trust, the largest allocation to a physically-backed Bitcoin vehicle among U.S. exchange-traded products.
“Fast forward 10 years, these products will be as relevant as they are today even as more efficient ways to access the physical currency continues to build,” John Hoffman, head of Americas, ETFs and indexed strategies at Invesco, said Thursday in an interview on Bloomberg TV. “We’re starting to see the financialization of this space as the next network effect.”
SATO and BLKC are among the nearly dozen of crypto-flavored ETFs that have cropped up as issuers seek regulatory approval for cryptocurrency ETFs. The U.S. Securities and Exchange Commission has delayed making a decision on the structure several times this year under Chairman Gary Gensler. However, a growing cohort of industry observers are speculating that the green light for futures-based Bitcoin ETFs could come this month.
Hoffman is adamant that full-fledged, pure-play Bitcoin ETFs are on the horizon, “just a matter of when,” he added. Bitcoin dropped about 1.6% to $54,054 as of 12:49 p.m. in New York.
In the meantime, SATO and BLKC provide an avenue for investors across the size spectrum to get exposure to cryptocurrency through ETFs, according to Galaxy’s Steve Kurz.
Separately, Novogratz said he’s hopeful of avoiding drastic action in the U.S. on digital assets as global scrutiny grows on the burgeoning industry.
“There’s a huge push right now from ourselves and lots of organizations to try to educate and work with the regulators, but more important the politicians,” Novogratz, said Thursday on the U.S. at the Token2049 crypto conference in London. “I’m optimistic that we come to something reasonable.”
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