Blockchain sector-themed exchange traded funds surged Friday after Coinbase said it is purchasing $500 million in cryptocurrencies and investing future profits into digital currencies.
Among the best performing non-leveraged ETFs of Friday, the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) was up 4.9%, the Global X Blockchain ETF (BKCH) increased 5.1%, the VanEck Vectors Digital Transformation ETF (DAPP) advanced 4.6%, the Bitwise Crypto Industry Innovators ETF (BITQ) rose 4.9%, and the Amplify Transformational Data Sharing ETF (BLOK) gained 3.8%.
Coinbase will put $500 million in crypto on its balance sheet and put an additional 10% of its quarterly profits into a crypto assets portfolio, CNBC reports.
“We believe in the cryptoeconomy, a future where economic transactions—buying, selling, spending, earning—will be based on crypto assets,” finance chief Alesia Haas said in a blog post. “This means we will become the first publicly traded company to hold Ethereum, Proof of Stake assets, [decentralized finance] tokens, and many other crypto assets supported for trading on our platform, in addition to bitcoin, on our balance sheet.”
CEO Brian Armstrong first revealed the plans in an earlier tweet, projecting the allocation to grow as the market matures. He also highlighted the company’s desires to diversify its cryptocurrency services and operations beyond trading.
“Hopefully over time we can operate more of our business in crypto,” Armstrong said on Twitter. “Today it is still a mix.”
The shift toward a greater focus on a cryptocurrency-based business stands out from others like MicroStrategy and Tesla, which have invested in a crypto hedge against inflation or potential devaluation of the U.S. dollar.
Oppenheimer’s Owen Lau argued that the new investment policy won’t lower the correlation between Coinbase and Bitcoin “materially in the near future.” However, it could be sign that Coinbase can “further facilitate and influence both retail and institutional adoption” over time by further integrating cryptocurrencies into its operations.
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