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Crypto Demand Drives Schwab to Launch New ETF Despite Bitcoin Crash

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Crypto Demand Drives Schwab to Launch New ETF Despite Bitcoin Crash

Investors have a new way to buy cryptocurrencies.

Schwab Asset Management has released its Schwab Crypto Thematic ETF (STCE) this month to meet investor demand.

David Botset, who was directly involved in the launch, said CNBC’s ETF Edge the new product is unique because investors get an indirect way to play cryptocurrencies in a meaningful way.

“It’s a very speculative investment,” the head of equity products and strategy said Monday. “But we are seeing certain segments of Schwab investors looking to access this asset class in their portfolios.”

The fund does not target actual cryptocurrencies. Instead, it groups companies with in-game skin.

“[The Schwab Crypto Thematic ETF] is different from other crypto-related ETFs in the market today in the way the index identifies, selects and weights constituents based on a company’s relevance to the crypto ecosystem using natural language processing said Botset in the ETF’s launch press release.

Widespread crypto names, including MicroStrategy, digital marathonI, Riot Blockchain, Coinbase, Silvergate Capital, Robin Hood and Interactive brokers hold stakes in the fund, much like other crypto-related thematic products.

The crypto-themed ETF, with its low-cost, index-based design, differs from similar funds, Botset explained. The fund is “the cheapest crypto-related product on the market at 30 basis points.” One basis point is equal to 0.01 percentage point.

“We believe our approach of combining human insight with AI and in models to assess companies’ exposure to the crypto theme is differentiated,” he said of the fund.

Botset said he sees small businesses, in particular, have the potential to grow through this strategy.

The Schwab Crypto Thematic ETF is up around 5% since its launch on August 4.

Botset argues that the timing of the launch “was a fluke”, acknowledging the dramatic downside of space.

Wall Street is still dealing with this year’s crash or so-called “crypto winter”. But bitcoinsthe largest coin in the world by market capitalization, is showing signs of strength this month.

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