Crypto ETFs (Exchange Traded Funds) are exchange-traded funds that track the price development of cryptocurrencies like Bitcoin, Ethereum, or XRP, without investors needing to own the coins themselves. You buy ETF shares like stocks through a regulated exchange – the ETF invests in the respective cryptocurrency for you and stores it securely, usually with a custodian.
There are two main models:
• Spot (physically backed): The ETF buys real coins (e.g., Bitcoin or Ethereum) and stores them – you are indirectly involved in the 'real' price. This connects the 'traditional finance world' with crypto.
• Futures-based: The ETF tracks the price through futures contracts. Price deviations are possible because futures do not always correspond exactly to the real-time price of the cryptocurrency.
Important roles include Authorized Participants (APs), who create new ETF shares by depositing cryptocurrencies or cash (fiat). Market makers provide liquidity and price stability.
Advantages:
• No technical knowledge or wallet needed, access via e-banking
• Regulated environment, more security and ease of use
• High liquidity and transparent costs
Disadvantages:
• Direct ownership of the coins is eliminated – the fund company has control over the private keys
• Higher fees than on crypto exchanges, occasional tracking errors
• Selection in the ETF space is still limited (mostly BTC, ETH, XRP)
Crypto ETFs are particularly suitable for investors who want to benefit from price development but prefer to leave custody and technical details to professionals
