Get Down With DAPP for Equity-Based Crypto Exposure

IIf there is one asset class that intrigues investors these days, it is cryptocurrency. Under the leadership of Bitcoin, digital currencies – at least the credible ones – are taking the financial world by storm.

Data confirms investors, including many retail market participants, are actively involved in the crypto universe. However, as the often wild movements of Bitcoin show, crypto is not for everyone. Certainly not nervous, risk-averse investors. That doesn’t mean these market participants shouldn’t have access to some of the benefits that digital assets offer.

The VanEck Vectors Digital Transformation ETF (DAPP) is a new exchange traded fund that enables this access through stocks. An easy way to show DAPP is to have the rookie fund build on the concepts outlined by older but still blooming blockchain ETFs.

DAPP, which debuted last week, follows the MVIS Global Digital Assets Equity Index. The benchmark “is designed to track the performance of companies involved in the digital asset economies”. according to VanEck.

DAAP fills an important gap

While many older blockchain ETFs, especially passive funds, rely heavily on tech stocks – still mature ones – as the main drivers of return, DAPP offers an evolved, relevant approach that includes the mix of traditional tech and fintech stocks.

This method is important at a time when more and more companies are viewing Bitcoin as an asset worth putting on company balance sheets. For example, MicroStrategy (MSTR), Square (SQ) and Tesla (TSLA) combine to hold $ 7.6 billion Bitcoin’s value on their balance sheets. DAPP is tackling this issue by assigning Square 9.11% of its weight and MicroStrategy nearly 5% – two of the largest assignments by these names among any ETF.

This is just an indication that DAPP is a valid option for investors looking for equity-based exposure to digital assets, and it is a good time to do just that.

“The possibilities of listed, pure companies for digital transformation are still young, but have increased in size and turnover in recent years.” according to VanEck research. “Despite the underlying volatility in digital assets themselves, many listed companies are investing heavily in new business areas in order to position themselves favorably as the use and acceptance of digital assets continues to grow.”

Spread of digital betting

Instead of a dedicated Bitcoin ETF whose outlook remains bleak, using stocks to unlock digital transformation is a credible and convenient approach for many investors that speaks in favor of DAPP.

“The digital transformation is underway. In recent years, digital assets have started to mature, which is reflected in their increasing global acceptance by both private and institutional investors, ”adds VanEck. “With this in mind, we believe that companies involved in the digital transformation of the global economy represent a long-term structural growth opportunity that is becoming increasingly accessible to investors.”

To properly benefit from these trends, investors should need a level of relevance and diversification that is not always found in Old Guard funds.

For its part, DAPP provides access to banks and asset managers, crypto custodians and miners, exchange operators, hardware companies, digital patent holders and payment gateway companies. That is a strong foundation for participating in a transformative industry.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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