Defiance ETFs is Bringing Non-Fungible Tokens to The Mainstream With an NFT-Linked ETF

New York-based Defiance ETFs has become the first fund manager to launch an Exchange-Traded Fund linked to NFTs.
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Quick Take:

  • The first Exchange-Traded Fund focusing on non-fungible tokens started trading on Thursday.
  • The ETF is sponsored by the New York-based fund management firm Defiance ETFs.
  • It will give mainstream investors access to the burgeoning NFTs market.

Defiance ETFs has launched the first Exchange-Traded Fund (ETF) linked to NFTs. The New York-based fund management firm announced Defiance Digital Revolution ETF (ticker NFTZ) last Thursday, giving mainstream investors access to the rapidly growing NFT market.

The ETF will concentrate its efforts towards non-fungible tokens, one of the fastest-growing segments of the blockchain and cryptocurrency markets. NFTs provide authenticity and security of ownership of digital items, allowing owners to transact with them.

Sylvia Jablonski, Co-founder and Chief Investment Officer of Defiance ETFs, dropped a hypothesis suggesting that NFTs could be bigger than the internet.  

For reference, the global e-commerce market, which is just one of the segments of the internet, crossed $26.7 trillion in May 2021. That is more than ten times the total value of the cryptocurrency market, which had a market cap of about $2.35 trillion on Tuesday.

The ETF will expose investors to companies investing in the NFT market, rather than linking them specifically to non-fungible tokens, blockchain, and the cryptocurrency marketplace, thus providing a cushion against the unpredictability of the industry.

The NFTZ will initially have 10 holdings led by Silvergate Capital Corp, weighted at 6.53%, which is a publicly listed company and the holding company for Silvergate Bank. Silvergate provides financial infrastructure solutions and services to companies in the digital currencies market. 

Other publicly listed companies making up the list include the web infrastructure and security company Cloudflare, weighted at 5.55% and global media and lifestyle company, the PLBY Group, with a weight of 5.04%. Other notable companies in the fund include Marathon Digital, Coinbase, and eBay.

The NFTZ tracks the BITA NFT and Blockchain Select Index, which tracks companies with significant exposure to NFTs, blockchain and crypto. The index is rule-based and revised on a quarterly basis. 

The NFT ETF debuted on the New York Stock Exchange on Dec. 01, 2021, trading at an expense ratio of just 0.65%.

BITA NFT and Blockchain Select Index draws its assets from 10 countries, led by the U.S., which accounts for 50.1%, Canada at 25.6%, and Japan at 8%.

Jablonski said NFT sales exceeded $15 billion in October, while recent Cointelegraph research indicates sales could top $17.7 billion by the end of the year.

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