Reduce Crypto Wild West Feel With Fintech ETF

With bitcoin being roughly 14 years old, it’s fair to say that crypto is a young asset class, and with that youth, some trials and tribulations are to be expected.

That includes some growing pains on the regulatory front. Investors are learning that in real time as the collapses of FTX and, more recently, Silvergate Capital, highlight the need for more investor protection in the crypto space. Market participants can reduce some of the “wild west” feeling of crypto investing with stocks, more specifically with exchange traded funds such as. ARK Fintech Innovation ETF (ARKF).

As the name suggests, the actively managed ARKF is a fintech ETF, not a dedicated crypto strategy. However, there are obvious and potentially attractive intersections between crypto and fintech – a topic that ARKF is intervening in. ARKF may also prove relevant at a time when crypto regulations are a cross-party issue and increasingly important to decision makers.

“Recent mergers of several high-profile crypto players have raised concerns for lawmakers and underscored the need for government oversight to protect investors, the economy and governments themselves from risk. While lawmakers from both sides of the aisle see the need for regulation, there has been little bipartisan consensus on exactly how and where to establish federal guidelines around the various digital currencies,” noted Morgan Stanley.

Even some crypto market enthusiasts argue that broader regulatory structures could improve the asset class’s adoption and use cases, while potentially mitigating disasters like FTX.

In turn, ARKF is home to some of the more durable, less controversial crypto-correlated stocks. For example, Coinbase (NASDAQ: COIN ) and Block (NYSE: SQ ) combine for about 21.60% of the ETF’s portfolio. They are among the firms that could benefit from more crypto regulations.

“Cross-border payments could see relatively rapid changes enabled by faster clearing, which could lower transaction costs and potentially provide meaningful deposit growth of stablecoins. In the meantime, building out new systems based on stablecoins could be the primary entry point into the broader payments ecosystem,” added Morgan Stanley to.

Another point in ARKF’s favor, as mentioned above, is that the ARK ETF is not solely dependent on crypto as a driver for returns. There is more to the ETF story, and it is positive. Take the case of QuickBooks and TurboTax parent Intuit ( INTU ), which accounts for 2% of the ARKF list. Some analysts see Intuit as one quality undervalued stock.

“We also like the company’s internal innovation and synergistic acquisitions, which have given the team an exemplary capital allocation valuation,” she adds. The latest quarterly results and forecasts were solidalso. Intuit stock is 19% undervalued relative to our $503 fair value estimate,” according to Morningstar.

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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.