Despite recent regulatory crackdowns, such as the U.S. Securities and Exchange Commission (SEC) suing both Binance and Coinbase, hope remains for institutional investors seeking exposure to crypto. As Dan Weiskopf and Mike Venuto, portfolio managers at Amplify ETF, note, the growth outlook for these companies may be “fuzzy and challenging,” but growth opportunities are more accessible than in previous years.
The managers argue that long-term investors not examining the transformational potential of blockchain and digital assets are overlooking a critical paradigm shift. Their ETF, Transformational Data Sharing ETF (BLOK), strategically increased its net exposure to Bitcoin miners, fueling a year-to-date growth of over 31%.
Weiskopf emphasizes the importance of involvement in the blockchain industry, which is poised to disrupt numerous sectors, and eschewing attention in this area would be a significant misstep. BLOK’s holdings include shares of MicroStrategy, Galaxy Digital, Coinbase, Block, and leading Bitcoin mining companies such as Riot Platform, Marathon Digital, CleanSpark, and Hut 8. These investments have seen significant growth this year; however, fluctuations are expected, as BLOK’s exposure to miners can move up and down.
In addition to Bitcoin miners, BLOK has significant exposure to companies involved in the transactional aspects of the blockchain industry like Coinbase, PayPal, and Robinhood. The recent SEC lawsuit against Coinbase has affected the company’s stock, but BLOK’s managers were not entirely surprised. They warned last month that regulatory pressures in the U.S. might affect Coinbase’s valuation or even discourage the company from innovating.
Weiskopf acknowledges that the regulatory landscape is not going to be straightforward, but he argues that regulators need something to regulate. The SEC targeting companies like Coinbase or Galaxy doesn’t necessarily determine the trajectory of the blockchain industry. According to Weiskopf, BLOK will manage risk appropriately and adapt its business model in response to marketplace conditions.
As the crypto and blockchain spaces continue to evolve, investor interest and involvement are crucial to fueling growth. While regulatory headwinds may cause near-term uncertainty, the transformative potential of blockchain and digital assets remains apparent and begs further exploration by institutional players. Ultimately, staying true to a growth and disruption-focused investment mandate will enable investors to capitalize on this burgeoning industry — even in the face of regulatory challenges.
Source: Decrypt
