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ETF sponsor Defiance launches first NFT-focused ETF in history

ETF sponsor Defiance launches first NFT-focused ETF in history

Last updated 29th Jun 2022
Disclosure

The NFT mania shows no signs of going anywhere. The emergence of the metaverse and DAOs have solidified that fact. Obviously, institutional investments were the next step for the sector and, unsurprisingly, asset managers are getting ready. Defiance launched the first NFT-focused exchange-traded fund (ETF) on Monday. It will be trading under the ticker $NFTZ.

Offering thematic exposure to NFT marketplaces

The fund will give investors thematic exposure to NFT marketplaces and issuers such as cryptocurrency exchange Coinbase and Playboy along with crypto stocks and NFTs by tracking the BITA NFT and Blockchain Select Index, according to an official press release.

Sylvia Jablonski, Co-founder and Chief Investment Officer of Defiance ETFs, said: 

NFTs could be bigger than the internet. In October, all time NFT trading volume surpassed $15 billion.

A fundamental change of creators’ economic model

NFT are already transforming the economic model for creators. The index to be monitored will be subject to rebalancing every three months. Investment products like these have gained massive traction in the finance world with the release of the first Bitcoin ETF in the US last month.

NFTs have taken the market by storm, transforming tokenization by giving creators and artists in general a way to reliably own their work.

Wall Street has embraced crypto   

Apart from celebrities jumping on the new digital bandwagon and releasing their own tokens, Wall Street has embraced cryptocurrencies, making an even bigger contribution to the industry’s success. Recently, crypto investment firm Arca launched a $30 million fund focused on NFTs. The fund invests in the actual NFTs, including collectibles, in game assets, and digital property.

Coinbase launching NFT marketplace soon

Coinbase CEO Brian Armstrong, whose exchange will also be tracked by $NFTZ, has gone on record saying that the company’s NFT market might even surpass its crypto business. The biggest crypto exchange in the US is opening its own NFT marketplace in the near future.

The risks

Defiance did not neglect to mention that investing involves risk in their press release, including the risk of losing principal. Its fund might trade at a premium or discount to net asset value (NAV). No ETF shares are transacted at NAV, but at market value, which means the fund won’t redeem them individually.

The fund will focus its investments (hold more than a quarter of its total assets) in crypto and blockchain company securities. Its shares can fluctuate beyond the amounts normal for shares of a fund that invests in securities of companies in a wider range of industries.

Daniela Kirova

Daniela Kirova

Daniela is a writer at Bankless Times, covering the latest news on the cryptocurrency market and blockchain industry. She has over 15 years of experience as a writer, having ghostwritten for several online publications in the financial sector.