Wall Street Vet Brian Kelly Launches Blockchain ETF

Investment manager Brian Kelly is launching a new blockchain startup-based exchange-traded-fund (ETF), he announced Wednesday.

Working in partnership with REX Shares founder Gregg King, Kelly will actively manage a portfolio of roughly 30 companies actively using blockchain technology and matching one of four general criteria, he told CoinDesk. The fund will support firms from the seed stage onward.

He told CoinDesk:

"When I look at the investment landscape, to me blockchain and cryptocurrencies are a once-in-a-lifetime investment opportunity ... if I look at every other asset class, to me the most attractive investment is blockchain and cryptocurrency. The growth is explosive [and] the potential is enormous."

The four criteria, or "pillars," include enterprise blockchain, or companies using the technology to streamline existing business processes; "Wall Street disruptors," that is, services changing how securities are traded (such as Overstock.com's tZero exchange); mining focused entities; and exchange firms and startups creating a decentralized internet, he said.

Further, the fund will evolve over time, Kelly said, noting that "this is an active ETF [so] we'll be able to add companies to the space."

While right now the fund may be invested in some enterprise companies, he believes that "over time we might become 100 percent pure play," or entirely invested in blockchain-specific startups.

That said, the ETF will not be invested in any cryptocurrencies directly, he added – rather, it would be invested in companies with regulated security offerings.

The fund will be open to anyone who has a U.S. brokerage account, he noted, including investors who reside outside the country. A person does not have to be an accredited investor to participate.

Kelly cited the progress companies have made in developing blockchain technology over the last year as the reason for the ETF, saying that firms were "finally getting some revenue from blockchain and cryptocurrency. Even a year ago you had a few who were doing it, but they didn't have significant revenue streams."

Now, with some companies even receiving bank financing, Kelly expressed confidence that he could "put together a diversified portfolio."

Neither is Kelly worried about the volatility seen in cryptocurrency markets. Although his ETF will be invested in companies working with various crypto assets, he said:

"With all investments obviously there’s risk, and the volatility of bitcoin versus equities can change, historically bitcoin has been volatile. That being said we don’t know what the future holds – as more people and more investments come into cryptocurrencies those potentially could actually become less volatile."

Greg King, Brian Kelly image courtesy Hod Klein