Schwab files for crypto ETF due to client demand

Multinational financial services giant Charles Schwab has responded to customer demand for investing in cryptocurrencies by filing an application with the U.S. Securities and Exchange Commission (SEC) to launch a crypto economy ETF.

The filing comes a week after Jonathan Craig, head of investor services at Schwab, told news source Financial Advisor IQ that one in six Schwab clients expressed interest in investing in crypto. He said:

“In the first half of this year, 16% of Charles Schwab’s clients planned to invest in cryptocurrencies.”

The proposed exchange-traded fund (ETF) is designed to track the returns of an index designed to "provide global exposure to companies that may benefit from developing or utilizing cryptocurrencies and other digital assets."

According to the official document, the ETF will use the Schwab Crypto Economy Index as a benchmark index and invest “at least 80% of its net assets” in companies that use Bitcoin (BTC) “and other digital assets” in the Schwab Crypto Economy Index listed stocks.

ETFs allow investors to speculate on the price of a basket of assets without hosting or owning them in any way. Schwab’s crypto economy ETF will not invest directly in crypto or initial coin offerings (ICOs), according to the documents. However, it will invest in companies dealing with cryptocurrencies:

“The fund may have indirect exposure to cryptocurrencies because it invests in companies that use one or more digital assets as part of their business activities or hold digital assets as proprietary investments.”

Charles Schwab joins rival financial institution BlackRock in filing for a crypto ETF. BlackRock, the world's largest asset manager with $10 trillion in assets under management (AUM), filed on Jan. 22. Its iShares Blockchain and Tech ETF will also invest in stocks of companies using blockchain and cryptocurrencies in the NYSE Factset Global Blockchain Technology Index.

There are currently eight crypto or blockchain-related ETFs available to U.S. investors, including Bitwise, Global X, Siren, Amplify, First Trust, VanEck, and Capital Link. Together, the funds manage $1.7 billion in total assets.