Canada's first blockchain ETF launches amid bitcoin volatility

Canada’s first blockchain exchange-traded fund is shrugging off bitcoin’s bust and will launch on Wednesday as planned.

Harvest Portfolios Group Inc’s Blockchain Technologies ETF will begin trading on the Toronto Stock Exchange under the symbol HBLK, amid extreme market volatility that saw the Dow swing more than 900 points in 25 minutes on Tuesday after plummeting the most ever on Monday.

The Dow’s whiplash pales in comparison to bitcoin, however, which plunged from a high of over US$19,000 in mid-December to below US$6,000 on Tuesday before rebounding.

Investors should not confuse Bitcoin’s bust with blockchain’s brighter future, analysts at Bloomberg Intelligence wrote. As a technology, blockchain will evolve with new applications, increased transaction speeds and improved security, they said.

HBLK will invest in a cross-section of large, established companies and emerging businesses that are primarily involved in the development of blockchain technologies, the company said. Its holdings include Hive Blockchain Technologies Ltd, Overstock.com Inc, BTL Group Ltd, and BIG Blockchain Intelligence Group Inc.

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Three blockchain ETFs have been created in the US, although not without hiccups. Shortly before listing, the US Securities and Exchange Commission encouraged the firms behind the first two funds to drop “blockchain” from their names. The regulator may have been keen to avoid a repeat of recent incidents, like when drink company Long Island Iced Tea Corp changed its name to Long Blockchain Corp and saw its stock price almost triple in a day.

Two of the ETFs, which track companies involved in the digital technology that underpins cryptocurrency transactions, launched on January 17 as the Amplify Transformational Data Sharing ETF, and the Reality Shares Nasdaq NexGen Economy ETF.

Buyers have already poured a combined US$264 million worth of assets into both, but they might actually just be paying a hefty price for some pretty basic technology stocks, including Intel, IBM and Nvidia.

The third fund, known by its ticker KOIN, began trading January 30. The Innovation Shares NextGen Protocol ETF uses “natural language processing” to scan news sources to determine sentiment and spot keywords so it can create a portfolio of as many as 60 stocks. As of Tuesday, KOIN had about US$3.5 million in assets and is down 4.5 per cent since trading started.