New BlackRock ETF lists crypto-leaning equities

BlackRock, the world’s largest asset manager, released a new exchange traded fund (ETF) last week that tracks the cryptocurrency industry, with the iShares Blockchain and Tech ETF.

Why it matters: A crypto product from the investing giant is another signal that traditional finance is not ignoring blockchain technology any longer.

  • What they’re saying: Rachel Aguirre, head of U.S. iShares Product at BlackRock, said in a news release, “We believe the moment is now to embrace these forward-looking investment themes before the market recognizes their full potential.”

The intrigue: The crypto industry wants an ETF very badly, but the one it really wants would track the day-to-day price of bitcoin.

Details: BlackRock’s fund includes 35 equities, plus various flavors of cash holdings. It has a management fee of 0.47%. The top five equities are (in descending order):

  • Coinbase, the country’s largest cryptocurrency exchange.
  • Marathon Digital and Riot Blockchain, both bitcoin mining firms.
  • Galaxy Digital, an investment management firm, with a founder who once earned a New Yorker profile.
  • IBM, the IT company.

Its fourth largest holding is actually BlackRock Cash Fund Treasury, which is basically all dollars and U.S. Treasuries.

  • Lots of its holdings are in mining, and some are familiar companies that do a little crypto dabbling, such as Robinhood and PayPal.

In the weeds: Silvergate is the bank many companies in crypto use. Silvergate holds $13.3 billion in cryptocurrency company assets, but it’s only 0.29% of the ETF’s holdings, one of the lowest allocations.

  • Similarly, NVIDIA only represents 4.21% of the fund, though it’s kind of the original indirect crypto equity (its processors can be used for certain kinds of proof-of-work mining).

Be smart: Investing in equities because you like cryptocurrency is kind of like ordering a pizza because you’ve got a taste for tomatoes — that logic will work for some people, but not everybody.

The bottom line: The ETF has less than $5 million under management so far.