Summary BLOX offers weekly income and crypto exposure via covered calls on companies tied to blockchain, not direct crypto, appealing to growth and income seekers. The fund prioritizes capital appreciation over income, with a 7.46% return since inception, but has a very short track record and high-risk profile. Most distributions are returns of capital, making BLOX tax-efficient for taxable accounts, especially for younger investors or retirees seeking regular income. Key risks include NAV erosion, crypto volatility, and a 1.03% expense ratio, but BLOX could see upside if holdings continue to outperform. Introduction For years, I remained skeptical about crypto assets, but recently, I've grown to realize that the digital asset is likely here to stay. Companies are adopting this, and I can honestly say I regret not investing heavily in Bitcoin USD ( BTC-USD ) after playing around with it years ago. But with the recent emergence of covered call ETFs with exposure to crypto, and me being a dividend-focused investor, this makes it easier to get portfolio diversification while being able to collect income. In this article, I introduce a new covered call ETF that gives investors just that: the Nicholas Crypto Income ETF ( BLOX ). While the fund is high risk with a very short track record and the potential to see NAV erosion over time, like a lot of other covered call funds, it may be suitable for those less risk-averse. In this article, I discuss BLOX's investment strategy and why this new covered call ETF that pays more than a 6% yield on a weekly basis may be attractive depending on your investment strategy. Who is BLOX? Nicholas Crypto Income ETF is a new, weekly-paying ETF that was recently launched roughly three months ago with an inception date of June 16, 2025. The fund is actively managed, and its main purpose is to give investors the potential to see capital appreciation. I found this particularly attractive because most covered call funds' main objective is to provide income and capital appreciation second. So far, BLOX has done that, up an impressive 18.78% at the time of writing. Data by YCharts But as previously mentioned, their track record is very short, so this should be taken with a grain of salt if considering. Moreover, the fund does not directly invest in Bitcoin or any other crypto assets but instead invests in companies with direct exposure to crypto. They also invest in those that conduct crypto mining, blockchain technology, or crypto trading platforms. BLOX currently has 72 holdings that include notable companies like Robinhood Markets ( HOOD ), Coinbase Global ( COIN ), NVIDIA ( NVDA ), Riot Platforms ( RIOT ), and Galaxy Digital ( GLXY ), all of which make up their top 10 holdings. VanEck Bitcoin ETF ( HODL ) makes up the largest portion of BLOX's portfolio at 18.15% . BLOX Comparison There are other weekly-paying ETFs with crypto exposure. Two are the Roundhill COIN WeeklyPay ETF ( COIW ) & REX COIN Growth & Income ETF ( COII ). Both have a slightly cheaper cost setup with expense ratios of 0.99% compared to 1.03% for BLOX. I usually look for funds with an expense ratio less than 1%, but for some, this may not be as important due to the income these funds usually generate. Contrarily, COIW & COII's portfolios mostly consist of U.S. Treasury bills, while BLOX holds actual companies. And this makes them less sensitive to interest rates and more likely to capture upside if their underlying assets see strong capital appreciation over the long term. Here's how some of their top holdings have performed vs. the S&P ( SP500 ) over the past year. HOOD has significantly outperformed, up over 400%, while HODL has also performed well, up over 100% . Going forward, BLOX is likely to see solid price appreciation if its holdings continue to appreciate. Seeking alpha Distributions & Taxes As stated previously, BLOX pays distributions weekly, making them particularly attractive for those in search of income. Although their track record is short, the fund has paid between $0.13 and $0.16 a week since inception. BLOX Another metric passive income investors may find attractive, especially younger investors, is that most of the fund's distributions are considered return of capital, meaning taxes are deferred until you decide to sell. This makes them suitable for a taxable account, meaning you can receive distributions now if you're looking to live off them instead of waiting until 59 1/2 to withdraw tax-free. Below is their latest distribution at the time of writing, paid on September 2nd, which was 100% ROC. BLOX However, the distribution the week prior, while mostly ROC, also consisted of net investment income, which is taxed differently. BLOX Net investment income is taxed depending on your modified adjusted gross income, or MAGI. But you would only be taxed if your NII & MAGI are higher than the set amount set forth by the IRS. Single - $200,000 Married filing jointly - $150,000 Married filing separately - $125,000 Here are two different examples: Charles Schwab So, depending on your tax situation, this may be a suitable investment if you're younger or a retiree. Risks The biggest risk when investing in covered call funds is NAV erosion, which leads to price decay. Moreover, since BLOX is roughly 3 months old, they have limited data to go on, making them less appealing for risk-averse investors. And thirdly, crypto assets are typically highly volatile, and BLOX could see underperformance as a result. Their expense ratio above 1% may also make them less attractive, as there are other cheaper funds. Conclusion With the growing popularity of covered call ETFs, my goal is to introduce readers to these, giving them additional exposure to income-generating assets. Moreover, because BLOX is new, investors may be catching them at a good time, as the fund could see solid upside if its underlying holdings continue to outperform. And while they may be considered less appealing for investors who are risk-averse, their weekly distributions and capital appreciation first investment approach may be suitable for those seeking growth & income.
