$7.5 Trillion AUM Company Charles Schwab Files for Crypto Economy ETF

Key Insights:

• Charles Schwab filed for a crypto economy ETF.
• The ETF will be tracking the Schwab Crypto Economy Index.
• The fund will generally track the same securities as those included in the index.

Charles Schwab, one of the biggest financial services companies, filed for a crypto economy ETF with the Securities and Exchange Commission (SEC).

Approval of this exchange-traded fund (ETF) will enable Charles Schwab’s clients to speculate on the index without holding any asset.

Another ETF

After Blackrock filed its crypto ETF in the latter half of the month, many companies are looking to make the most of the opportunity and follow suit.

Charles Schwab already handles over $7.5 trillion of assets under its management. Thus it is not surprising that the company launched a crypto economy ETF.

Unlike traditional ETFs, a crypto economy ETF will not directly track the cryptocurrencies. This is because Charles Schwab does not own any cryptocurrency.

Within the SEC filing too, the company clearly said that the Schwab Crypto Economy ETF would not be investing in cryptocurrencies or any digital assets.

Instead, the ETF is designed to track the Schwab Crypto Economy Index. This index is comprised of companies that are engaged in some of the other forms of crypto-related activities.

Companies using, buying, selling, and facilitating crypto and digital assets or conducting similar activities are referred to as companies in the “crypto economy.”

Reiterating the same the filing noted:

“The fund may, however, have indirect exposure to cryptocurrencies by virtue of its investments in companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments.”

Plan in Making

It isn’t surprising to see the sudden appearance of this ETF filing because not too long ago, Charles Schwab’s CEO had something positive to say about cryptocurrencies.

In an interview, CEO Walt Bettinger said,

“Crypto is hard to ignore, right? It’s fairly significant today. We have a lot of ways that clients today can invest in crypto. What we don’t offer is direct trading. We would welcome the chance, if the opportunity presents itself from a regulatory standpoint. There’s a tremendous void in that space today for a firm like Schwab. The transaction costs in crypto trading are exceptionally high, the spreads are exceptionally high.”

Furthermore, as per Schwab’s Q1 Retail Client Sentiment Survey, 16% of Charles Schwab clients said that they will invest in cryptocurrency in the first part of 2022.

Thus, filing for a crypto economy ETF makes much more sense considering what clients are leaning towards.