A comprehensive guide of crypto ETFs

Cryptocurrency ETFs, or exchange-traded funds, offer a convenient and secure way to invest in the growing world of digital assets.

Bitcoin spot ETF application was approved by SEC on 10th Jan 2024. In total 11 ETFs are approved!

What are crypto ETFs?

Crypto ETFs, known as exchange-traded funds, are financial instruments that replicate the performance of one or more cryptocurrencies. They allow investors to engage with the cryptocurrency market indirectly, eliminating the need to personally hold or manage the digital assets.

These ETFs bridge the traditional financial world and the burgeoning digital asset sector, offering a regulated, transparent avenue for cryptocurrency investment. Designed to offer diverse exposure across multiple assets, crypto ETFs enhance liquidity and trading flexibility, making them an appealing option for both individual and institutional investors seeking a passive approach to investment.

Futures ETFs vs Spot ETFs

Understand more about Futures ETFs and Spot ETFs to help you navigate the exciting world of crypto investing!

What is Futures ETF?

A futures exchange-traded fund (ETF) is an investment fund that tracks the price of futures contracts. These contracts are prearranged agreements to trade at a future date and at a set price. Such ETFs allow investors to gain exposure to asset's price fluctuations without holding the actual digital asset, potentially reducing risks associated with digital asset custody and security.

What is Spot ETF?

A spot exchange-traded fund (ETF) is an investment fund that tracks the price of an underlying asset, such as a commodity or a cryptocurrency. Spot ETFs hold the underlying asset directly, rather than tracking the price of a futures contract. They offers investors more direct exposure to the cryptocurrency's price movements.

Key differences between Futures ETFs and Spot ETFs

Attribute	Futures ETFs	Spot ETFs
Underlying asset	Futures contract	Actual asset
Price correlation	Futures contract price	Real-time spot market price
Exposure and risks	Indirect exposure to asset’s prices. Risks level might be influenced by futures market dynamics and asset's volatility	Direct exposure to asset’s price fluctuations. The asset's primary risk lies in its volatility
Trading platform	Traditional stock exchanges	Traditional stock exchanges
Example	ProShares Bitcoin Strategy ETF (BITO) VanEck Bitcoin Strategy ETF (XBTF) VanEck Ethereum Strategy ETF (EFUT)	ARK 21Shares Bitcoin ETF (ARKB) Wisdomtree Bitcoin Trust (BTCW) Ark 21Shares Ethereum ETF *Note: no Bitcoin spot ETF has been approved yet.

Timelines for Bitcoin Spot ETFs

While the U.S. Securities and Exchange Commission (SEC) considers the applications, here's a comprehensive list of all proposed spot Bitcoin ETFs:

Issuer (Ticker)	Company	Filing Date	19b-4 Federal Register	First Deadline	Second Deadline	Third Deadline	Final Deadline
ARK 21Shares Bitcoin ETF (Re-filing) (ARKB)	21Shares & ARK	6/28/21	5/15/23	6/29/23	8/13/23	11/11/23	1/10/24
iShares Bitcoin Trust	BlackRock	6/15/23	7/19/23	9/2/23	10/17/23	1/15/24	3/15/24
Bitwise Bitcoin ETP Trust (Re-filing)	Bitwise	10/14/21	7/18/23	9/1/23	10/16/23	1/14/24	3/14/24
VanEck Bitcoin Trust (Re-filing)	VanEck	12/30/20	7/19/23	9/2/23	10/17/23	1/15/24	3/15/24
Wisdomtree Bitcoin Trust (Re-filing) (BTCW)	Wisdomtree	12/8/21	7/19/23	9/2/23	10/17/23	1/15/24	3/15/24
Invesco Galaxy Bitcoin ETF (Re-filing)	Invesco & Galaxy	9/21/21	7/19/23	9/2/23	10/17/23	1/15/24	3/15/24
Wise Origin Bitcoin Trust (Re-filing)	Fidelity	3/24/21	7/19/23	9/2/23	10/17/23	1/15/24	3/15/24
Valkyrie Bitcoin Fund (Re-filing) (BRRR)	Valkyrie	1/22/21	7/21/23	9/4/23	10/19/23	1/17/24	3/19/24

Early history of crypto ETFs

Crypto ETFs have evolved from early regulatory hurdles to a rapidly expanding market with diversified offerings and ongoing regulatory considerations.

Early efforts and regulatory scrutiny (2013-2017)

The idea of crypto ETFs emerged in the early 2010s, alongside the rising popularity of Bitcoin and other cryptocurrencies. Initially, their development faced regulatory headwinds, especially from the U.S. Securities and Exchange Commission (SEC), which raised concerns about market manipulation, investor protection, and the valuation of underlying cryptocurrency assets. Nevertheless, the concept persisted, with proponents continually refining their proposals in response to the SEC's feedback.

The arrival of bitcoin futures ETFs (October 2017)

October 2017 marked a significant milestone with the SEC's approval of the first Bitcoin futures ETFs, including the ProShares Bitcoin Strategy ETF (BITO) and the VanEck SolidX Bitcoin Strategy ETF (BITF). These ETFs track Bitcoin futures contracts traded on regulated exchange, providing a more regulated form of cryptocurrency investment and addressing some of the SEC's prior concerns.

Recent progress of crypto ETFs

Crypto ETF options exploded after 2018. Potential spot Bitcoin ETF approvals might be a game changer.

Expansion of crypto ETF landscape (2018-2021)

Between 2018 and 2021, the crypto ETF arena expanded significantly, introducing a variety of products catering to diverse investor needs and risk profiles. The popularity of diversified crypto ETFs, which track a range of cryptocurrencies, and thematic ETFs focusing on specific crypto sectors like DeFi, grew. This attracted a broader range of investors, including institutional ones, thereby increasing the total assets under management in these ETFs.

Continued growth and regulatory developments (2022-Present)

Global regulators, including the SEC, have been scrutinizing crypto assets and their related products to ensure investor safety and market integrity. The SEC, in particular, has been cautious about spot Bitcoin ETFs, which would hold and securitize Bitcoin directly. Despite these regulatory hurdles, several spot Bitcoin ETF proposals are under review, with their potential approval representing a significant advancement for the crypto ETF market.