What is a crypto ETF and how does it work?

Crypto ETFs provide exposure to digital assets without handling wallets or private keys. In this guide, we explore how crypto ETFs work, the types available and practical ways to access them globally including how to buy Bitcoin ETFs on Crypto.com. 

What is a crypto ETF? 

A crypto ETF is a fund that trades on a traditional stock exchange and aims to track the price of a cryptocurrency such as Bitcoin or Ether. It allows investors to gain exposure to crypto without having to buy, store or manage the cryptocurrency directly.

Like other exchange-traded funds, crypto ETFs trade throughout the day and are priced in real time, with bid-ask spreads similar to stocks. They can be bought and sold through standard brokerage accounts, making them more accessible for investors who prefer familiar investment products.

There are two main types of crypto ETFs: Spot crypto ETFs and futures crypto ETFs. Spot crypto ETFs hold the underlying cryptocurrency on behalf of investors, with the assets stored by a regulated, qualified custodian. Futures crypto ETFs don’t hold the cryptocurrency itself. Instead, they use regulated futures contracts to track the asset’s price.

The availability of crypto ETFs varies by region, as approval depends on local regulations. This means the type of crypto ETF an investor can access may differ depending on where they live.

Context and timelines

The global rollout of crypto ETFs has occurred in stages. For example, in the US, the US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs on January 10, 2024, followed by spot ETH (Ethereum) ETFs that began trading on July 23, 2024. 

The Canada BTCC ETF was launched in February 2021. Hong Kong spot crypto ETF and BTCs were launched in 2024 and they approved the world’s first spot SOL (Solana) ETF in October 2025. 

The Crypto.com App offers 400+ cryptocurrencies and allows users to diversify with crypto baskets. 

A quick comparison: Spot vs futures crypto ETFs

How do crypto ETFs work? 

A crypto ETF allows you to buy shares that represent a small part of the assets in the fund such as cryptocurrencies, futures or crypto-related stocks. Shares trade on exchanges like Nasdaq or HKEX and prices stay close to the ETF’s net asset value (NAV). This NAV vs price relationship is maintained through creation and redemption.

Authorized Participants (APs) deliver crypto or cash to the ETF issuer to create new shares when prices are high or redeem shares when prices are low. This process means that premiums and discounts can be kept smaller than in closed-end funds.

When dealing with ETFs there are two terms to know: Contango and backwardation. Contango is when futures cost more than spot, rolling into higher-priced contracts and creating a performance drag. Backwardation is when futures cost less than spot, resulting in a potentially positive roll yield. 

Various costs can affect the stock tracking:

●      Expense ratio: Annual fee charged by the ETF.

●      Trading spreads: Wider spreads increase transaction costs.

●      Roll costs (futures): Can widen tracking difference.

●      Cash drag: Holding cash for collateral may reduce tracking precision.

●      Operational fees: Custody, rebalancing and other fund expenses.

There are risk considerations, too. This includes premiums and discounts, liquidity shocks, regulatory events and tracking differences. 

Key takeaways

• Authorized Participants (APs) help align share prices with NAV.
• In-kind creation and redemption crypto ETF allows APs to swap crypto for shares (where permitted).
• Cash creations are used when in-kind transfers aren’t allowed.
• Spot ETFs track underlying crypto prices. 
• Futures ETFs incur roll costs, especially during contango. 

Types of crypto ETFs

There are different crypto ETFs. Each varies in what they hold, where they trade and how closely they track crypto prices.

Things to note

●      Futures ETFs hold regulated CME crypto futures.

●      Spot ETFs hold the underlying crypto asset.

●      Single-asset ETFs target Bitcoin, Ethereum and newer assets.

●      Equity-based ETFs hold shares of blockchain or mining companies. 

●      Jurisdiction matters when it comes to allowed structures. 

Below we look into the different types of crypto ETFs:

1. Crypto futures ETFs

These ETFs hold regulated Bitcoin and Ethereum futures from the CME. They must roll expiring contracts into new ones. Not just that, but they are subject to margin rules and must use cash collateral. 

Roll timing can produce contango drag and it may not match spot returns. So, they offer exposure through a traditional ETF framework but for futures rather than spot crypto holdings. 

2. Spot crypto ETFs

Spot ETFs hold the underlying crypto asset through a qualified custodian and aim to track spot prices directly. The shares represent a proportional claim of the held assets and in some jurisdictions in-kind creation is allowed. 

3. Bitcoin ETFs

Bitcoin ETFs track the price of Bitcoin. There are two types, spot Bitcoin ETFs and Bitcoin futures ETFs. 

Factors to consider include fees and spreads, assets under management (AUM) and trading volume, custodian and storage method and tracking history.

4. Ethereum ETFs

Ethereum ETFs are structured similarly to Bitcoin ETFs, with spot Ethereum ETFs and Ethereum futures ETFs being the two main structures.

5. Solana ETFs

Hong Kong approved the world’s first spot Solana ETF in October 2025, reiterating the region’s evolving digital asset framework. They’re similar in structure to Ethereum and Bitcoin ETFs, but track the price of Solana. Frameworks differ by jurisdiction so it's important to check local regulations. 

6. Blockchain ETFs

These ETFs hold equity shares of companies that participate in the blockchain ecosystem. This includes mining companies, crypto exchanges, hardware manufacturers and blockchain software firms. Be mindful, however, that these ETFs don’t track crypto prices directly. 

7. Bitcoin mining ETFs

Mining ETFs hold equity tied to Bitcoin mining operations, such as crypto cloud mining. With this in mind, price behavior is influenced by BTC price movements, hash rate and hardware efficiency, energy costs and treasury management by mining firms. 

How to buy and evaluate crypto ETFs 

It’s important to note that crypto ETF availability depends on your region and local regulations. For example, in the US, the Crypto.com Stocks product (US only) offers access to US stocks and ETFs, including eligible crypto-linked ETFs.

For direct crypto exposure, the Crypto.com App offers 400+ assets and themed crypto baskets. If you’re eligible and want to get started, just follow the step-by-step instructions below:

Step 1

Create your Crypto.com account – sign up, verify, set security.

Step 2

Add funds using bank transfer (always free)*, card, Apple Pay or Google Pay.

Step 3

Choose your exposure path:

○      Pick a crypto thematic basket.

○      Browse BTC/ETH and 400+ assets to buy directly.

Step 4

Place your order and set up various tracking tools such as market or limit orders, price alerts, time-weighted average price (TWAP) and recurring buys.

Strengths of crypto ETFs

Any type of investment comes with a level of risk and no guarantee of a return. Some of the reasons crypto ETFs are growing in popularity include:

●      Public exchange access: ETFs use traditional brokerage accounts.

●      Familiar tax forms: US ETFs issue Form 1099.

●      Qualified custodians: Assets are stored by regulated third parties.

●      Intraday pricing: You can buy and sell during market hours.

●      Portfolio tools: There’s watchlists, research screens and planning tools.

●      Premium/discount control: Creation/redemption helps limit extremes.

Crypto ETF risks

As mentioned above, ETFs also come with a level of risk. This is usually a result of:

●      Market volatility: Crypto markets move quickly.

●      Tracking difference: Returns may differ from spot performance.

●      Futures-specific risks: Contango/backwardation and roll timing.

●      Premium/discount swings: Possible during high volatility.

●      Regulatory shifts: Rules can change across jurisdictions.

●      Custody concentration: Spot ETFs rely on custodial partners.

Crypto ETF fees, liquidity and tracking

When considering ETFs, it’s wise to consider all fees. Each fund typically charges an annual management fee and while lower fees generally mean less performance drag, spreads and trading costs also play a meaningful role. This is known as the expense ratio.

Liquidity is another key factor and is shaped by the liquidity of the underlying assets, the ETF’s own trading volume, the participation of market makers and the size of the bid-ask spreads. 

It’s also worth looking into how closely an ETF tracks its benchmark. Tracking error reflects the volatility of the differences between the ETF and its benchmark while tracking difference shows the total return gap over time. 

For futures-based products, performance can diverge further. For example, when Bitcoin futures are in contango, forcing an ETF to sell cheaper expiring contracts and buy pricier new ones, this can gradually erode returns compared to holding the spot asset. 

Crypto ETFs vs buying crypto directly 

Weigh up all factors when choosing between crypto ETFs and buying crypto directly. ETFs have the following characteristics:

●      Accessible via brokerage accounts

●      Works with retirement accounts (where allowed)

●      Traditional tax forms (US)

●      No self-custody step=.

●      Daytime trading with standard order types

Buying direct crypto has the following characteristics:

●      24/7 global markets

●      Access to 400+ assets in the Crypto.com App

●      Utility features (e.g., on-chain transfers)

●      Thematic exposure through crypto baskets

Each approach suits different goals which is why you need to consider your own requirements as well as your experience and long-term financial plan.

How to choose the best crypto ETF

To help you choose the best crypto ETF selection, we’ve created a handy checklist. Work through each step carefully, tick off what matters to you and weigh up each factor against your goals and risk tolerance before deciding.

●      Strategy type: Spot, futures or crypto-related equities.

●      Expense ratio: Compare across similar ETFs.

●      AUM & liquidity: Higher tends to mean tighter spreads.

●      Trading spreads: Check average intraday spreads.

●      Custodian: Review provider disclosures.

●      Creation/redemption: In-kind vs. cash only.

●      Methodology: Caps, weighting rules, seeding.

●      Issuer reputation: Longevity and transparency.

●      Regional rules: US, Canada, Europe or HK frameworks.

Ready to explore Crypto ETFs?

1. Get Started with Crypto.com – Create your account in minutes.
   
2. Add funds your way – Bank transfer (always free)*, card, Apple Pay/Google Pay.
   
3. Choose your path – US ETFs in Crypto.com (US only) or buy BTC/ETH and explore crypto baskets in the App.
   
4. Set tools – Price alerts, recurring buy and TWAP to automate your plan.
   
   

FAQs about crypto ETFs

What is a crypto ETF?

A crypto ETF is a fund that aims to track the price of a cryptocurrency or crypto-related theme. Shares trade on public exchanges.

How do spot and futures crypto ETFs differ?

Spot ETFs hold the crypto asset through a custodian. Futures ETFs hold regulated CME futures contracts and can diverge from spot due to roll costs.

Are spot Bitcoin and Ethereum ETFs available in the US?

Yes. Spot Bitcoin ETFs launched on January 10, 2024. Spot Ethereum ETFs began trading on July 23, 2024.

What fees do crypto ETFs charge?

ETF charges vary between platforms but typically include annual management fees, trading spreads and futures roll costs (for futures ETFs).

What is contango and why does it matter for futures ETFs?

Contango is when futures prices are higher than spot. This can create performance drag.

How are crypto ETFs priced versus NAV?

Prices are set by market supply and demand but stay close to NAV through AP-driven creation and redemption.

Do crypto ETFs ever trade at a premium/discount?

Yes, but this is typically smaller than closed-end funds. Premiums and discounts can widen during volatility or when liquidity is limited.

How do I choose a crypto ETF?

Compare strategy type, fees, AUM, spreads, custodian, methodology and regional rules. It’s also beneficial to review issuer disclosures and track records.

What are the tax considerations for crypto ETF (US) investors?

US ETFs generally issue Form 1099. Tax treatment can vary by asset type and should be reviewed by a tax professional for best practice.

ETF vs buying crypto directly: which is better?

There isn’t a better choice. ETFs offer brokerage access and familiar reporting. Direct crypto offers 24/7 trading and broader asset coverage. The right choice depends on your preferences.

Important information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks, such as price volatility and market risks. Before deciding to trade cryptocurrencies, consider your risk appetite. Services, features and other benefits referenced in this article may be subject to eligibility requirements, token holdings, and may change at the discretion of Crypto.com. Past performance may not indicate future results. There's no assurance of future profitability, and content may not reflect current opinions.

Services, features and other benefits referenced in this article may be subject to eligibility requirements, token holdings, and may change at the discretion of Crypto.com. 

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