What happened, what’s next, and 4 ETF picks, is your portfolio prepared?
In this episode, Christian Magoon explains the latest legislative developments, including the GENIUS Act, the CLARITY Act, and the Central Bank Digital Currency Surveillance Act (CBDC). Magoon highlights the potential market implications of these bullish cryptocurrency laws and showcases several Amplify ETFs that may be well-positioned to capitalize on these legislative changes. Tune in now!
Welcome back to ETF Watch. I'm Christian Magoon with Amplify ETFs and it's the summer of crypto.
00:07
Lots of legislation and headlines about cryptocurrency and blockchain stablecoins.
00:13
You, as an advisor or an investor, may have a lot of questions about it. We're gonna break down that legislation today and talk about several Amplify ETFs that may stand to benefit.
So the first piece of legislation that's been signed into law by President Trump is the Genius Act, and that really focuses on creating regulatory environment for stablecoins.
And stablecoins are just another way to pay for goods and services or to transfer money, uh, via cryptocurrency or blockchain.
00:45
So stablecoins are not a security, uh, they're not a commodity. Uh, they're simply a form of payment that will be backed by the equivalent value in U.S. Treasuries or US dollars. So this really digitizes the payment systems.
01:01
Now, these stablecoins will be built on certain types of cryptocurrency using their protocols for the blockchain, uh, cryptocurrencies like Ethereum or Solana or other so-called level twos.
So this is very bullish for those types of cryptocurrencies. It's also pretty bullish for U.S. Treasuries and U.S. dollars because they'll back these stablecoins.
01:23
What are the benefits really of stablecoins?
Well, we have a grid here, uh, created, uh, through research from Amplify and A16 that really talks about the variety of ways stablecoins could make payments more efficient in terms of time and cost from credit card to debit card to a CH transfer, international wire transfer money remittances or peer-to-peer payment applications.
In short, this really is the fastest and cheapest way to transfer dollars, and thus, stablecoins should provide a lift to US dollar dominance as well as overall GDP.
02:02
The two other pieces of legislation that have passed the House and are now in the Senate are the Clarity Act, which seeks to regulate digital assets, uh, and determine tests for what a digital asset is, for example, maybe property or security or commodity.
The other act is the anti-CBDC Central Bank Digital Currency Surveillance Act.
And simply put, that's seeking to ban the Federal Reserve from creating a central bank digital currency that allows the government to control and observe everything you do with your money.
02:35
These two acts are likely to continue to progress in the Senate and could be signed, uh, in early fall of this year. So with all these regulatory tailwinds for the crypto and blockchain space, let's talk about several Amplify ETFs that we think are well-positioned to capitalize on these trends.
First is BLOK. This is our actively managed blockchain and cryptocurrency stock ETF, that's been around since 2018.
This ETF selects stocks that are not only in the blockchain ecosystem but also in the cryptocurrency ecosystem. In addition, it owns Bitcoin ETPs, again, being actively managed. It seeks to control risk both in up markets and down markets.
03:22
And over the last five years has generated a 25% average annualized return. This year has been a good year for block up 40% year to date, and certainly has benefited from a lot of what's going on in this digital payment legislation related to stablecoins. Indeed, 31% of BLOK's portfolio is related to digital payment platforms.
So take a look at BLOK as a great capital appreciation opportunity to play this move into digital payments and stablecoins. Speaking of digital payments, we have the only digital payments ETF in the marketplace.
04:06
Ticker IPAY: IPAY just celebrated its 10-year anniversary, and over the last 10 years, the whole payment space has changed. 10 years ago, people were just starting to make digital payments once in a while on their computers, then it migrated to mobile devices.
Now it's becoming more and more a part of our everyday life. And with this recent, uh, stablecoin legislation through the Genius Act, we think this area is ripe for a real renewal of its growth proposition.
04:36
Let's take a look at some of the top holdings of iPay.
And you can see companies like Coinbase, PayPal, Block, which was just added to the S&P, American Express, Fiserv.
Companies at the forefront of innovation in this new regime that has been ushered in by the Genius Act. And how they embrace stablecoins, as well as other cryptocurrencies, will be telling.
05:04
IPAY is the only ETF focused in this area, and we expect a renaissance to happen in the digital payment space.
Based off the recent legislation, look at iPay as a potential nice compliment and forward-leaning allocation to the future of payments and financial services.
05:21
That's the Amplify digital payments ETF IPAY.
Finally, with all this cryptocurrency news, you can't escape what's going on with Bitcoin.
Bitcoin has recently been at all-time highs and continues to be in vogue across a variety of different types of investors from retail institutions, even governments.
Now, Amplify offers several different Bitcoin ETFs that implement covered call strategies, which allow you to have some of the upside of Bitcoin, but also material amount of income.
05:54
Our BITY and BAGY are just over 75 days old and have been attracting assets and paying out monthly distributions that are quite attractive. In addition, these funds have thus far been able to outperform Bitcoin in terms of total return. So if you're looking at allocating to Bitcoin, but maybe don't want all the volatility, take a look at both of our Bitcoin covered call ETFs, BITY and BAGY.
06:20
So in this summer of crypto and blockchain legislation, is your portfolio participating in these opportunities?
06:33
We hope it is. If it isn't, take a look at a variety of our Amplify ETFs that we think will serve you well in this new regime.
Hey, I'm Christian Magoon from Amplify ETFs. We'll see you next time.
Bitcoin ETPs are exchange-traded investment products not registered under the 1940 Act that seek to generally match the performance of the price of Bitcoin, and trade intra-day on a national securities exchange. The Funds do not invest directly in Bitcoin.
Out of the money (OTM) options has a strike price that the underlying security has yet to reach. An option premium is the cost an option buyer pays to the seller for the right to trade an asset at a set price within a certain period.
Narrowly focused investments typically exhibit higher volatility.
The Funds are non-diversified, meaning they may concentrate their assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies.
BLOK: Blockchain technology may not develop efficient processes that yield economic returns for the Fund’s investments, with risks including theft, competition, cybersecurity issues, developmental challenges, and lack of regulation. The investable universe may include companies involved in transformational data sharing or blockchain consortia. The Fund will invest in foreign securities, which carry additional risks compared to U.S. securities. Cryptocurrency investments are highly speculative, subject to extreme volatility, and may produce uncertain U.S. federal income tax treatment.
IPAY: Mobile payment companies face intense competition, both domestically and internationally, and are subject to increasing regulatory constraints, particularly with respect to fees, competition and anti-trust matters, cybersecurity and privacy. Mobile payment companies may be highly dependent on their ability to enter into agreements with merchants and other third parties to utilize a particular payment method, system, software or service, and such agreements may be subject to increased regulatory scrutiny. Additionally, certain mobile payment companies have recently faced increased costs related to class-action litigation challenging such agreements. Such factors may adversely affect the profitability and value of such companies.
The Fund’s return may not match or achieve a high degree of correlation with the return of the Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index.
BITY: There is no guarantee the Fund will achieve the Target Option Premium in any given year. If the NAV of the Fund remains level or decreases during any one-year period, the annualized premium generated by the Fund may be significantly less than the Target Option Premium for that time period.
BAGY/BITY: The Fund is actively managed and its performance reflects the investment decisions that the Adviser makes for the Fund. There is no guarantee the investment strategy will be successful. The Fund is actively managed and its performance reflects the investment decisions that the Adviser makes for the Fund. The annualized option premium may be significantly higher or lower than the stated range.
The Funds face risks by investing in Bitcoin through the Bitcoin ETP and Bitcoin ETP Options, as Bitcoin is a new and highly speculative investment. The market for Bitcoin is volatile and subject to rapid changes, regulatory actions, and numerous challenges to widespread adoption. Issues such as slow transaction processing, variable fees, and price volatility further increase these risks.
There is a lack of consensus regarding the regulation of digital assets, including Bitcoin, and their markets. Trading in shares of a Bitcoin ETP on U.S. securities exchanges may be halted due to market conditions or for reasons that, in the view of an exchange, make trading in shares of the Bitcoin ETP inadvisable.
With covered call risk, the Fund might miss out on profits if the security’s value rises above the option’s premium and strike price while still facing potential losses if the value declines. Option contract prices are volatile and affected by changes in the underlying asset’s value, interest or currency rates, and expected volatility, all of which are influenced by political, fiscal, and monetary policies.
The Funds may use FLEX Options, which can be less liquid than standardized options. This may make it difficult to close out FLEX Options positions at desired times and prices.With covered put risk, significant stock price increases can lead to substantial losses on your short position. The premium provides some income but may not fully offset the loss if the stock rallies unexpectedly.
The Funds currently expect to make distributions on a monthly basis, a portion of which may be considered return of capital.