They tend to have a high minimum investment amount, and each purchase of shares is accompanied by a lock-up period for investors. For example, MicroStrategy Inc. owned 189,150 bitcoins as of Dec. 27, 2023. Galaxy Digital Holdings Ltd. Some publicly listed companies hold a large number of bitcoins. Investing in companies that hold cryptocurrencies on their balance sheet is another way to invest in crypto without owning the digital tokens.

After about a decade of regulatory wrangling, the Securities and Exchange Commission (SEC) authorized the first crypto spot ETFs in early 2024. These investment vehicles make it possible for retail investors to gain direct exposure to crypto prices without having to own the assets directly. Spot ETFs directly hold the cryptocurrency, building a portfolio that naturally replicates the performance of the digital assets it contains. While most ETFs replicate how indexes work by holding a basket of the underlying assets, crypto ETFs have a couple of ways of tracking the performance of a digital currency. How Does a Cryptocurrency ETF Work?

For example, some tokens are available on certain cryptocurrency exchanges while others are not, and exchanges can operate in some countries but not others. There are also extra costs that come with buying crypto. The novelty of cryptocurrency ETFs is one of its drawbacks, not least since it’s still unknown how regulations in this area will evolve. Cryptocurrency ETFs allow you to diversify your holdings without the fees and hassles of buying and exchanging the tokens yourself.

Plus, these investors might be unfamiliar with networking technology, making crypto-speak, such as halving and blockchain, even more disinviting. Cryptocurrency security can be a tall order for individual investors, who may not be familiar with the required methods. Cryptocurrency exchanges, storage devices, wallets, and some poorly designed blockchains have been hacked since they were launched, leading to constant worries in the crypto world about security. There are more than 8,900 cryptocurrencies available in trading markets. The infrastructure to buy and sell them is becoming more sound, but it’s still relatively untamed territory compared with securities exchanges. Investing in a cryptocurrency ETF makes learning enough to get into crypto much more manageable. A cryptocurrency ETF takes care of this for you.