On their first trading day, they had about $4.6 billion in trading volume. It is also possible for an investment fund to directly trade and hold cryptocurrencies. Called spot crypto ETFs, these funds buy cryptocurrencies and securitize them. Investors buy and sell shares as needed, just like a traditional ETF. In a spot crypto ETF, the fund can issue and redeem shares, offering retail and other investors more liquidity in the crypto market and a chance to gain exposure to these assets.

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Let’s dig into these options. But they are not ETFs. While the SEC has only reluctantly approved a handful of crypto ETFs, a similar product has already been available for years: bitcoin investment trusts. They are open only to investment firms, accredited investors, or high-net-worth individuals and are not accessible to the retail public. They own bitcoins on behalf of investors, and their shares trade in over-the-counter markets. These are closed-end funds that resemble the spot crypto ETFs being proposed.

How Does a Crypto ETF Work? Crypto ETFs can track the value of cryptocurrencies by investing in futures contracts for digital currency, or by investing in digital currencies directly. Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. This makes it possible to gain exposure to cryptocurrency prices without having to do business on a crypto exchange or deal with the costs and complexities of directly owning digital assets. Like other ETFs, crypto ETFs trade on regular stock exchanges, and investors can hold them in their standard brokerage accounts. Cryptocurrency exchange-traded funds (ETFs) track the price performance of one or more cryptocurrencies by investing in a portfolio linked to their instruments. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

The Ether Strategy ETF (EETH) tracks the price of ether using futures contracts. In January 2024, the Securities and Exchange Commission approved the first 11 bitcoin spot ETFs for U.S. For investors looking for exposure to several crypto tokens, ProShares has ETFs that track a combination of bitcoin and ether using equal or market-cap weighting. This uses futures to generate the inverse of bitcoin’s returns, making it possible for investors to profit on days when the cryptocurrency’s prices decline. There is even an inverse ETF, the ProShares Short Bitcoin Strategy ETF.

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