The U.S. just got a ‘pure-play’ Bitcoin and crypto ecosystem ETF

Global investment manager VanEck launched its ‘Vectors Digital Transformation ETF’ (DAPP), yesterday, as per a release. The fund offers ‘pure-play exposure’ to companies that do business or derive revenues from Bitcoin- or crypto-related activities.

ETFs, short for exchange-traded funds, are financial instruments that allow traders and investors to bet on the prices of any asset in a safe and regulated manner. Several companies have long-tried to launch Bitcoin ETFs in the US to no avail (VanEck being one of them), but the DAPP allows for BTC exposure indirectly.

“A pure-play ETF that offers exposure to Bitcoin exchanges, miners, big hodlers & infrastructure cos,” said Gabor Gurbacs, CEO of VanEck, announcing the launch.

He added, “My message to institutions: Understand & support #Bitcoin companies. Innovation is unstoppable.”

A pure-play ETF that offers exposure to #Bitcoin exchanges, miners, big hodlers & infrastructure cos.

My message to institutions: Understand & support #Bitcoin companies. Innovation is unstoppable. @JanvanEck3, @thatEdLopez, @jpleeVE, @Nasdaq, @vaneck_us https://t.co/0dDbh7jZhL

— Gabor Gurbacs (@gaborgurbacs) April 14, 2021

How DAPP brings Bitcoin exposure

As per the release, DAPP seeks to track the price and yield performance of the MVIS Global Digital Assets Equity Index, a rules-based modified capitalization-weighted, float-adjusted index intended to give investors a means of tracking the overall performance of companies involved in digital assets. 

The index is designed as an overview of the big crypto-relevant players in the institutional space. 

To be included, a company must generate at least 50% of its revenues from cryptocurrency projects, build products generate at least 50% of their revenues from cryptocurrencies, and/or have at least 50% of its assets invested directly or indirectly in Bitcoin, Ethereum, or other cryptocurrencies.

As a result, the index provides exposure to companies involved in mining, hardware, exchanges, holding and trading, payment gateways, patents and services, and banking. 

The Index rebalances quarterly, and, as such, does not invest in digital assets (including cryptocurrencies) both directly or through the use of digital asset derivatives. 

An ever-growing market

VanEck said DAPP demonstrated Nasdaq’s value as a resource for growing cryptocurrency strategies in the evolving ETF market.

 “The digitalization of the global economy has been picking up steam for the past several years, and as digital assets mature, this has driven the growth of several innovative companies,” said Ed Lopez, Managing Director, Head of ETF Product for VanEck. 

Lopez added, “Investors have had to choose among funds that too often included companies only tangentially involved with digital assets. That is something we’ve sought to solve with the launch of DAPP.”

Bitcoin-related stocks like mining firms and investment products have seen a big surge in their prices over the past year, mirroring the rise of the asset.

An example is Riot Blockchain (RIOT), a mining company, whose stocks rose over 12,000% in the past year as Bitcoin surged 10x from $5,000 in mid-2020 to well over $50,000 in early-2021.

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