Guide to Bitcoin and Ethereum ETFs: What They Are, How They Work

BTC and ETH ETFs rewrote the history books. Learn how they work, how they got approved, issuers like BlackRock, and ways they got crypto into the mainstream.

Introduction: What to Know About Crypto ETFs

Bitcoin and Ethereum, once sitting within the confines of crypto exchanges, now reside on exchange-traded funds (ETFs), the same wrapper used for stocks, bonds, and commodities. 

For the first time, both of the world’s largest cryptocurrencies are available to investors through the traditional brokerage accounts they already use.

It marked a turning point for mainstream adoption. Spot Bitcoin ETFs finally won the US Securities and Exchange Commission (SEC) approval in January 2024, smashing records with billions in inflows during their first week. Just months later, Ethereum ETFs marked another milestone by bringing smart contract assets into regulated investment products.

ETFs make it easier for everyday investors and institutions to gain crypto exposure, without worrying about wallets, private keys, or crypto exchanges. 

But what exactly is an ETF, and why is it such a big deal for Bitcoin and Ethereum?

What Is an ETF?

An exchange-traded fund (ETF) is a type of investment product that bundles assets together and trades on stock exchanges, just like a regular share. ETFs can hold stocks, bonds, commodities — and now, cryptocurrencies.

The appeal of ETFs lies in their accessibility and simplicity:

• They can be bought or sold instantly through a brokerage account
  
• Fees are generally lower than actively managed funds
  
• Investors don’t need to manage the underlying assets themselves

For crypto, this makes a big difference. Instead of buying BTC or ETH on an exchange and storing it in a digital wallet, an investor can simply purchase an ETF like they would Apple or Tesla stock. The ETF provider handles custody and regulation, giving traditional investors a familiar way to access digital assets.

Spot vs Futures ETFs: What’s the Difference? 

ETFs tied to Bitcoin and Ethereum come in two main forms: Spot-based and futures-based.

• Spot ETF: Holds the cryptocurrency directly, tracking its market price more closely
• Futures ETF: These funds invest in futures contracts — agreements to buy or sell the asset at a set price on a future date. Futures are common in TradFi assets (e.g., oil, gold) but can diverge from spot prices. As contracts expire and must be rolled over, futures ETFs often carry extra costs and may not track the asset’s price perfectly.

In short, spot ETFs generally provide cleaner, more direct exposure, while futures ETFs may suffer from tracking errors or reduced returns over time.

Bitcoin ETFs

The road to a Bitcoin ETF was long and filled with delays. After years of rejections, the SEC approved 11 spot Bitcoin ETFs in January 2024. The launch broke records, with $4.6 billion in inflows on the first day and more than $10 billion within the first month.

Key players at launch:

• BlackRock iShares Bitcoin Trust (IBIT): Emerged as the flagship product and one of the most successful ETF launches on record
• Fidelity Wise Origin Bitcoin Trust (FBTC): A low‑cost offering from another top‑two asset manager in flows and AUM
• Grayscale Bitcoin Trust (GBTC): Converted from a closed‑end trust; initially saw heavy outflows as fees normalised
• ARK 21Shares Bitcoin ETF (ARKB): Collaboration between ARK Invest and 21Shares
• Bitwise Bitcoin ETF (BITB): Reported strong day‑one demand and emphasises research‑driven education
• VanEck Bitcoin Trust (HODL): Long‑time crypto proponent; memorable ticker
• WisdomTree Bitcoin Fund (BTCW): Among the early US applicants
• Invesco Galaxy Bitcoin ETF (BTCO): Partnership with Galaxy for crypto market expertise
• Franklin Bitcoin ETF (EZBC): From Franklin Templeton, a mainstream asset‑management brand
• Valkyrie Bitcoin Fund (BRRR): One of the earlier US crypto ETF sponsors; known for futures products pre‑approval
• Hashdex Bitcoin ETF (DEFI): Pivoted from a futures‑heavy strategy to primarily spot bitcoin holdings post‑approval

Within the first year, spot Bitcoin ETFs were repeatedly cited as one of the most successful ETF launches in history, with assets and flows dominated by the largest funds (notably IBIT and FBTC). 

Through ETFs as a new, regulated demand channel, it contributed to BTC crossing the $100,000 milestone in December 2024, and it went on to set a new all‑time high of around $124,480 in August 2025. 

Ethereum ETFs

The SEC approved exchange rule changes (19b‑4s) in May 2024, and after several weeks of S‑1 revisions (notably removing any staking features and standardising cash creations), spot ETH ETFs began trading in July 2024. 

The approval surprised many after months of regulatory silence and debate over whether ETH might be treated as a security; the late‑May pivot cleared the path for listing, with cash creation and redemption only at launch.

While not as explosive as Bitcoin’s debut, they still attracted over $1 billion in inflows during the first week.

Key differences:

• ETH ETFs are structured as cash creation or redemption only, meaning no direct in-kind transfers of ETH between issuers and custodians
• US regulators prohibit ETH ETFs from offering staking rewards, so investors don’t earn the yield they would if they held ETH directly and staked it

Key issuers:

• BlackRock iShares Ethereum Trust (ETHA)
• Fidelity Ethereum Fund (FETH)
• Grayscale Ethereum Trust ETF (ETHE) – Converted from a trust, initially saw notable outflows due to higher fees
• Grayscale Ethereum Mini Trust (ETH) – Lower‑fee alternative launched alongside ETHE
• VanEck Ethereum ETF (ETHV)
• Invesco Galaxy Ethereum ETF (QETH)
• 21Shares Core Ethereum ETF (CETH) – Renamed to TETH
• Franklin Ethereum ETF (EZET)
• Bitwise Ethereum ETF (ETHW)

Ethereum ETFs mark the first time US investors can gain regulated exposure to a programmable smart contract platform, not just a store-of-value asset like Bitcoin.

ETH ETFs built momentum through 2025. In August 2025, US spot ETH ETFs recorded about $1B in a single day of net inflows and, on select days, outpaced BTC ETF inflows.

Benefits and Limitations of BTC and ETH ETFs

Conclusion: What Lies Ahead for Crypto ETFs

The arrival of Bitcoin and Ethereum ETFs in the US represents a major bridge between TradFi and crypto. They give both retail investors and institutions a regulated way to access the two largest digital assets, accelerating mainstream acceptance.

Looking ahead, the question is which asset comes next. With Solana, XRP, and other blockchains gaining traction, the ETF wave may not stop at Bitcoin and Ethereum. For now, though, these two products are setting trends and standards as to how crypto fits into portfolios across Wall Street and Main Street alike.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. 

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.