Why Charles Schwab Is Prepping Its First Crypto Product

The financial services giant follows BlackRock, Fidelity and other big-name firms that capitulated on digital assets.

AccessTimeIconMar 3, 2022 at 10:05 p.m. UTC
Updated Mar 4, 2022 at 8:50 p.m. UTC

Danny is CoinDesk's deputy business editor. He owns BTC, ETH and SOL.

Schwab Asset Management is preparing to offer its first in-house crypto product to its 33 million clients: the “Schwab Crypto Economy ETF” – a vehicle that tracks equities engaged in the world of digital assets.

An incomplete prospectus filed Wednesday with the Securities and Exchange Commission (SEC) said Charles Schwab’s exchange-traded fund (ETF) would invest in “stocks that are included in the Schwab Crypto Economy Index.” Miners, exchanges, blockchain developers and other crypto companies will comprise that yet-to-be-formed index, the filing said.

In short, the planned ETF would offer Schwab’s massive client base tailored (and non-controversial from a regulatory standpoint) exposure to the crypto economy, though not to any coins.

It would be the first to do so carrying the Schwab brand and name, a representative confirmed.

Schwab (SCHW) joins BlackRock (BLK), Fidelity and other financial institutions that have gradually warmed to the booming crypto markets.

“The reason they’re doing it is that all of their customers are asking them how they can get exposure to crypto,” Bitwise Chief Investment Officer Matt Hougan told CoinDesk, calling it a “milestone.”

“A crypto equity product – it’s the first step. It’s the crawl in the ‘crawl, walk, run,’” he said. (Bitwise launched a similar ETF last May.)

Indeed, Schwab’s own client base is becoming ever more interested in crypto investments opportunities, according to the firm’s own research. Twenty percent of respondents to Schwab’s most recent retail client sentiment survey said they’d invested in crypto in the last three months; 16% said they planned to do so again in the following three.

That’s a marked uptick from 12 months prior, when 10% and 7% of respondents, respectively, said the same.

Clients’ ability to do so through Schwab has thus far been limited to third-party products like the Grayscale Bitcoin Trust (GBTC), a representative said. (Both CoinDesk and Grayscale are owned by crypto conglomerate Digital Currency Group.) Clients approved for futures trading can trade bitcoin futures, too, Schwab said.

Focused on equities instead of coins, Schwab’s ETF avoids the regulatory quagmire ensnaring spot products like a bitcoin ETF. But it’s not going to be trading on NYSE just yet. Schwab still needs to find an indexing partner to build the product’s backbone.

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Danny is CoinDesk's deputy business editor. He owns BTC, ETH and SOL.

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Danny is CoinDesk's deputy business editor. He owns BTC, ETH and SOL.

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