• ETF Insights

    Invest in the Digital Assets Transformation

    John Patrick Lee, CFA, Product Manager
     

    The digital transformation is underway. In recent years, digital assets have started to mature, evidenced by increased global adoption by both retail and institutional investors. Against this backdrop, we believe that companies involved in the digital transformation of the global economy represents a long-term structural growth opportunity that is becoming more and more accessible to investors.

    What Are Digital Assets?

    The term “digital assets” encompasses a broad range of technology and applications, commonly referred to as blockchain or distributed ledger technology. Digital assets can take a variety of forms, and are not just limited to cryptocurrencies.

    What Are Digital Assets?

    Companies at the Forefront of the Digital Asset Transformation

    The companies involved in the digital transformation are distinctly different from digital assets themselves. Digital transformation companies may range from digital asset mining to hardware to exchanges that facilitate the trading of digital assets.

    Companies at the Forefront of the Digital Asset Transformation

    Digital transformation companies may engage in only one of these business lines, or they may engage in multiple, depending on their goals, capabilities and focus within the broader digital transformation space. Below are two quick examples to illustrate how different companies are generating digital transformation-related revenues.

    Square* (SQ), the top weighted payment gateway company in the MVIS Global Digital Assets Equity Index, helps sellers start, run and grow their businesses. Investors and consumers can purchase cryptocurrency on Square’s popular CashApp. According to SEC filings, Square “recognizes revenue when customers purchase bitcoin and it is transferred to the customer’s account.” In 2020, that amounted to $4.57 billion in bitcoin-related revenues, an increase of 785% from the year before.1

    Voyager Digital(VYGR) focuses on enabling users to buy and sell cryptocurrencies across multiple exchanges in one account. According to SEC filings, Voyager “offers investors, developers and platform providers a fully functional suite of APIs and mobile apps to allow anyone the ability to invest, earn and secure multiple types of digital assets.” As of 31 March 2021, Voyager had over $2.4 billion in assets under management and 270,000 funded accounts.2

    Digital Transformation Companies Reflect a Structural Growth Opportunity

    The opportunity set of publicly traded, pure-play digital transformation companies is still young, but has grown in both size and revenues over the last few years. Despite underlying volatility in digital assets themselves, many publicly traded companies are investing heavily in new business lines to position themselves favorably as digital asset usage and adoption continues to accelerate.

    The Growth of Publicly Traded Digital Transformation Companies (2012 – 2020)

    The Growth of Publicly Traded Digital Transformation Companies (2012 – 2020)

    Source: VanEck. Revenues and market caps reflect pure-play digital asset companies as defined by MVIS and included in the composition of the MVIS Global Digital Assets Equity Index on 31/3/2021. See important disclosures and index descriptions at end.

    The digital transformation opportunity set currently has fewer listed companies compared to more mature industries. However, we believe that as digital assets use cases and adoption grow over time, these early-mover companies may benefit, and that more digital transformation companies will go public.

    * Voyager Digital and Square were the top two holdings in the MVIS Global Digital Asset Equity Index on 9/4/2021.

    Source: https://www.coindesk.com/square-cash-app-bitcoin-revenues-swell-785-in-2020.

    Source: Voyager Digital, March 2021.


    Important Disclosure

    For informational and advertising purposes only.

    This article originates from VanEck (Europe) GmbH, Germany. It is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this article. The article and opinions expressed are current as of the article’s posting date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. VanEck makes no representation or warranty, express or implied regarding the advisability of investing in securities or digital assets.

    Investing is subject to risk, including the possible loss of principal up to total loss.

    No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.

    MVIS® Global Digital Assets Equity Index is the exclusive property of MVIS (a wholly owned subsidiary of Van Eck Associates Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MV Index Solutions GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck Vectors™ Digital Assets Equity UCITS ETF is not sponsored, endorsed, sold or promoted by MV Index Solutions GmbH and MV Index Solutions GmbH makes no representation regarding the advisability of investing in the Fund.

    © VanEck (Europe) GmbH.

     


  • Important Disclosure

    For informational and advertising purposes only.

    This information originates from VanEck (Europe) GmbH which has been appointed as distributor of VanEck products in Europe by the Management Company VanEck Asset Management B.V., incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin). The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index.

    All performance information is historical and is no guarantee of future results. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KIID before investing.

    No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.

    © VanEck (Europe) GmbH