Defiance Launching First NFT-Based ETF

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In Brief
  • Defiance ETF is launching the first exchange-traded fund (ETF) based on non-fungible tokens (NFTs).

  • The Defiance Digital Revolution ETF (NFTZ) offers investors thematic exposure to blockchain and cryptocurrency ecosystems.

  • While only offering exposure to the companies and not cryptocurrencies directly, it is one of the first ETFs to tap into the burgeoning market for NFTs.

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Defiance ETF is launching the first exchange-traded fund (ETF) based on non-fungible tokens (NFTs).

By tracking the BITA NFT and Blockchain Select Index, the Defiance Digital Revolution ETF (NFTZ) offers investors thematic exposure to blockchain and cryptocurrency ecosystems, including NFT marketplaces and issuers such as Coinbase and Playboy. While only offering exposure to the companies and not cryptocurrencies directly, it is one of the first ETFs to tap into the burgeoning market for NFTs. The index is rules-based and rebalanced on a quarterly basis, and the fund carries a management fee of 0.65%.

NFT market

NFTZ “is a great way for investors to gain access to not only the fast-growth blockchain technology aspect of the digital world, but companies involved in the renaissance of NFTs,” said Sylvia Jablonski, chief investment officer for Defiance ETFs. “The companies in this index are key players in the build-out of Web 3.0,” she added.

According to Jablonski, NFTs will fundamentally change the economic model for athletes, artists and other creators, and other industries in ways that can’t even be conceived yet. She believes that NFTs coil become bigger than the Internet, adding that all-time NFT trading volumes surpassed $15 billion in October.

Jablonski also highlighted the social component behind NFTs that offers a potent form of marketing. She believes this is what sets NFTs apart from Bitcoin and other crypto-related investments. “NFTs today are what Bitcoin was 10 years ago, except that there is a robust community made up of creators and investors who co-exist to determine the future path of a non-fungible token,” said Jablonski. “They are part of a special club, a membership, and so the investment takes on this new meaning of social interaction.”

ETF waiting

NFTZ is among several blockchain thematic ETFs that have proliferated, while the US Securities and Exchange Commission rejected numerous applications for a Bitcoin spot ETF. In October, the SEC finally allowed the first Bitcoin-based ETF, albeit based on Bitcoin futures, which the closest regulators have come to approving a fund that invests in cryptocurrencies. Tired of waiting for approval in the US, Fidelity Investments could launch its Fidelity Advantage Bitcoin ETF on the Toronto Stock Exchange as early as next week.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.

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