September 24, 2023

Charles Schwab To Introduce Crypto ETF On The NYSE

For years, Charles Schwab had been dubious of the cryptocurrency market, but the tide appears to be changing. The latest announcement said that the Schwab Crypto Thematic Index will be launched next week.

The announcement

The investment division of the Charles Schwab Corporation is called Schwab Asset Management, which announced that the new fund would start trading on the New York Stock Exchange (NYSE).

It also disclosed that its ticker will be STCE and its aim will be to provide people with indirect exposure to the crypto space.

On Friday, it filed the prospectus with the US Securities and Exchange Commission (SEC). It highlights that the new ETF will not be making direct investments in digital assets or crypto.

Instead, 80% of the assets would be invested in securities, such as shares of firms that are part of the crypto space.

According to the prospectus, about 41% of its assets have been invested in the diversified financial sector, while software companies have been given an investment of about 44%.

Other details

The head of equity project management at Schwab, David Botnet said that the ETF would be able to provide investors with greater exposure to companies that are crypto focused.

He said that blockchain technology ETFs are not able to do the same because they are exposed to firms that are involved in blockchain, such as IBM, Amazon, MasterCard, and more.

The operating expense for the fund would be around 0.30%, which translates into $3 for every $1,000 invested.

The company said that this makes it the cheapest crypto ETF in terms of costs that can be found these days.

To compare, 0.85% is charged in the Bitwise Crypto Industry Innovators ETF (BITQ) and 0.50% is charged by VanEck via its Digital Transformation ETF (DAPP).

The lower cost is offered to overcome the disadvantage of being late. The company has been trailing behind Fidelity, which is its rival in the traditional finance space, for a couple of years now.

Doubtful of crypto

Walt Bettinger, the chief executive of Charles Schwab, had been dismissive of cryptocurrencies back in 2019 and had termed that as too speculative.

In comparison, Fidelity had gotten authorization for operating its Fidelity Digital Asset Service in New York, as a limited liability trust firm.

The CEO said at the beginning of the year that he believes that the crypto space has a big void that his company can fulfill.

It was around this time that Fidelity had become the first company that was allowing its employees to invest about 20% in Bitcoin from their 401(k) accounts.

This had not been well-received by many of the anti-crypto lawmakers out there. The change in the stance of Schwab shows that the relevance of the crypto market is growing, along with its potential.

Even though this year has been a tough one for the crypto space, many investors have taken it in stride and are betting that the market will turn around soon.

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