Australian ETF provider BetaShares has launched a new thematic equity ETF providing exposure to companies operating within the crypto-asset economy.
The fund provides exposure to the ‘picks and shovels’ of the emerging crypto asset economy.
The BetaShares Crypto Innovators ETF (CRYP AU) has been listed on the Australian Securities Exchange.
CRYP targets the crypto industry theme by investing primarily in ‘picks and shovels’ infrastructure companies as well as firms offering key services within the digital assets ecosystem.
The fund launched on Thursday 4 November amid robust investor demand with AUM rising to more than A$40 million by the end of trading.
Methodology
The ETF is linked to the Bitwise Crypto Innovators Index which is calculated and distributed by Moorgate Benchmarks. Constituents are selected from a global universe of companies with market capitalizations above $100 million and average daily trading volumes greater than $500,000.
The index consists of two tiers. The first, which accounts for 85% of the index weight at each rebalance, comprises ‘pure-play’ crypto innovators that derive at least 75% of their revenue from servicing cryptocurrency markets. This tier includes miners, equipment suppliers, brokerages, analytics firms, and providers of financial services. Companies with more than 75% of their net assets in liquid crypto asset holdings are also eligible.
The second tier, at 15% of the index weight, consists of large-cap non-pure-play companies that have a significant business initiative focused on the crypto ecosystem or hold at least $100m in liquid crypto assets.
The methodology selects the 50 largest eligible companies while capping the number of constituents from tier two at ten.
Constituents within tier one are weighted by float-adjusted market capitalization subject to a single stock cap of 10%, while constituents within tier two are equally weighted. Reconstitution and rebalancing occur on a quarterly basis.
The index is designed to adapt quickly to the rapidly changing crypto ecosystem by incorporating a “fast-entry” rule that allows for the inclusion of eligible IPOs and direct listings just one day after a company’s debut.
As of the end of October, over three-quarters (77.3%) of the index was allocated to stocks from the US with the next-largest country exposures being Canada (10.3%), China (4.9%), and Germany (1.8%).
The index’s sector allocation was dominated by stocks from the software and capital markets sectors at 46.5% and 26.4%, respectively, while banking stocks also played a significant role with a combined weight of 13.3%.
Notable positions included Galaxy Digital (12.0%), Marathon Digital (11.3%), Coinbase (10.7%), Silvergate Capital (10.2%), MicroStrategy (9.4%), and Riot Blockchain (5.2%).
The ETF comes with an expense ratio of 0.67% and distributes income on an annual basis.
The fund’s launch coincides with that of the Cosmos Global Digital Miners Access ETF (DIGA AU) on Chi-X Australia. DIGA, from Sydney-based crypto specialist Cosmos Asset Management, is linked to the proprietary Global Digital Miners Access Index which provides exposure to companies worldwide that are focused on digital asset mining and blockchain infrastructure. This fund comes with an expense ratio of 0.90%.
In addition to crypto equities ETFs, Australian investors will likely soon see directly backed crypto products after the country’s securities regulator, the Australian Securities and Investments Commission, gave the green light for physical ETFs tracking the spot prices of bitcoin and ethereum.