Approval sought for China’s first blockchain-focused ETF

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Penghua Fund has filed an application with the China Securities Regulatory Commission (CSRC) to launch the country’s first blockchain exchange-traded fund (ETF).

Why it matters: Despite continuous pressure on cryptocurrencies in the country, the government very much encourages blockchain research and development. Many industry watchers believe the industry will accelerate in 2020, particularly after Chinese President Xi Jinping gave his endorsement of the technology in October.

  • The recently-launched Blockchain 50 Index and future blockchain ETFs could provide a more convenient investment instrument in a market overflowing with blockchain concept stocks, state news outlet Xinhua reported.

Details: The ETF would track the performance of a basket of publicly traded stocks from businesses involved in the blockchain sector.

  • Shenzhen-based asset manager Penghua Fund submitted the proposal for the blockchain ETF on Dec. 24, the same day the Shenzhen Stock Exchange announced its Blockchain 50 Index—an index that reflects the performance of listed companies involved in the blockchain industry.
  • The application is currently under review, according to CSRC’s website.
  • Penghua Fund claims to manage 159 public funds and has over RMB 564 billion (around $80 billion) worth of assets under management.

Context: Shenzhen is a key testing ground for blockchain applications and China’s planned digital fiat currency.

  • Blockchain ETFs already operate in the UK and the US. Invesco Elwood Global Blockchain, a major blockchain ETF,  launched in March on the London Stock Exchange.