After being dubious of crypto for some years, Charles Schwab will launch its Schwab Crypto Thematic Index next week.
The fund, which will trade on the New York Stock Exchange Arca under the STCE ticker, will offer indirect exposure to the “crypto ecosystem,” Schwab Asset Management, the investment arm of the Charles Schwab Corporation, said in a statement.
Schwab’s prospectus, which the firm filed with the U.S. Securities and Exchange Commission on Friday, says in bold type that the new fund “will not invest in cryptocurrency or digital assets directly.”
Rather, at least 80% of the fund’s assets will be invested in securities, like shares of companies that have a stake in crypto. For example, the prospectus said the fund currently has 44% of its assets invested in software companies and another 41% in the diversified financials sector.
“STCE can offer more targeted exposure to cryptocurrency-focused companies compared to blockchain technology ETFs, which may have significant exposure to multi-national companies involved in blockchain (e.g., Amazon, IBM, Mastercard, and others),” David Botnet, Schwab’s head of equity product management, told Decrypt in an email.
The fund will have an annual fund operating expense of 0.30%, which works out to be $3 per $1,000 invested. That means it’ll have “the lowest cost crypto-related ETF available to investors today,” the company said in the announcement.
For comparison’s sake, the Bitwise Crypto Industry Innovators ETF (BITQ) charges 0.85% and VanEck, which just filed a new spot Bitcoin ETF application, charges 0.50% on its Digital Transformation ETF (DAPP).
It’s a bid to eke out an advantage while being late to the field. Schwab has trailed behind its traditional finance competitor, Fidelity, for a few years now.
In 2019, Charles Schwab CEO Walt Bettinger was dismissive of crypto, calling it too “speculative.” Meanwhile, in 2019, Fidelity had just been granted a charter to operate its Fidelity Digital Asset Services as a limited liability trust company in New York State.
Then, at the start of 2022, Schwab’s Bettinger told The Dallas Morning News that he thinks there’s “a tremendous void” in crypto for his firm. Around the same time, Fidelity became the first firm to allow employees to invest up to 20% of their 401(k) accounts in Bitcoin—to the dismay of some anti-crypto lawmakers.
Editor's note: This story was updated after publication to clarify that it is Schwab Asset Management, and not Charles Schwab Bank, that is launching the ETF.