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阅读公告Crypto ETPs and ETFs Explained: How Exchange-Traded Crypto Products Work
Learn how crypto ETPs work, including ETFs, ETNs, and ETCs, what investors own, how they track crypto prices, and their costs and risks.
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September 9, 2026 — 11 min read
Cryptocurrency can be bought directly through a crypto exchange. But that is no longer the only route.
Investors can also gain exposure to Bitcoin and other cryptocurrencies through securities listed on traditional stock exchanges. These products are broadly called crypto exchange-traded products (ETPs) and include structures such as ETFs, ETNs, and ETCs.
They may look similar on a brokerage screen, but they can work very differently underneath.
This guide explains what crypto ETPs are, what investors actually own, how these products track cryptocurrency, and the costs and risks involved.
Crypto ETPs, or exchange-traded products, are securities that are traded on an exchange and provide exposure to a cryptocurrency, a basket of crypto assets, or crypto-linked returns.
Three layers help explain how any crypto ETP works:
Underlying asset: the asset the product tracks. Bitcoin, ether, a basket of crypto assets, or an index.
Exposure mechanism: how the product earns its return. By holding the asset, by holding futures on it, or by using a swap.
Legal wrapper: what the investor buys. A fund share, a debt note, a trust interest.
These distinctions are crucial to know before evaluating any crypto ETP. Now, let's directly jump into the various crypto ETPs available.
ETP works best as the broad category.
Exchange-traded funds (ETFs), exchange-traded notes (ETNs), and exchange-traded commodities (ETCs) are all part of that category.
Product | How does it work? | What backs the return? |
|---|---|---|
ETF | A fund where the investor buys a share of a pooled vehicle that holds the underlying asset or its derivatives. | Assets held for shareholders |
ETN | A debt security that the investor buys as an unsecured claim on the issuer, who owes the return of an index minus fees. | Issuer's promise to pay |
ETC | A debt security like an ETN, but backed by collateral held with a trustee, usually the physical asset itself. | Physical asset held via trustee |
ETF, ETN, and ETC are different ways of packaging crypto exposure into an exchange-traded security.
The bigger question for the investor is "what do I actually own once the money goes in?"
Buying a crypto ETP gives ownership of a financial asset tied to crypto, rather than direct ownership of the cryptocurrency itself.
Product | What the investor owns |
|---|---|
Crypto ETF | Shares in a fund or trust that holds cryptocurrencies, crypto-futures, or similar assets. |
Crypto ETN | A debt note that gives a claim against the issuer for the promised crypto-linked return. |
Crypto ETC | Usually a debt security backed by crypto or other collateral held for the product. |
ETCs need a little more qualification because their legal structure varies.
A physically backed Bitcoin ETC may issue debt securities backed by Bitcoin held with a custodian.
Another ETC may secure its notes with collateral rather than giving investors a direct claim on specific crypto.
However, the common thread across all three structures is that the investor owns the listed security.
And direct control and custody of the underlying cryptocurrency generally stays elsewhere. This creates real limitations for a crypto ETP investor.
Crypto ETP investors do not control the private keys and generally cannot move the underlying crypto to another wallet.
Investors can't use the cryptocurrency as collateral on a lending protocol or spend it.
Redemption of crypto ETPs is also not straightforward and depends on the products' terms.
ETPs are listed on exchanges that have trading hours, while the underlying cryptocurrency moves in price 24/7.
Self-custody sits at the other end of this trade-off. It hands the private keys and full control of the asset to the holder.
That raises an obvious question: if crypto can be owned directly, why use an ETP at all?
The primary purpose of crypto ETPs is to make crypto exposure compatible with the infrastructure already used to buy and hold traditional investments. They can sit inside brokerage accounts and managed portfolios without requiring wallets or private-key management.
Crypto ETPs also bring crypto exposure into a regulated securities framework, with listing, disclosure, and oversight requirements that vary by product and jurisdiction.
The trade-off is straightforward: convenience and familiar market infrastructure in exchange for direct control of the underlying asset.
Crypto ETPs serve a real purpose for a specific set of investors. The next question is how these ETPs gain exposure to cryptocurrency price action.
Crypto ETPs can gain exposure to cryptocurrency price action in three main ways:
Holding the cryptocurrency itself
Futures contracts
Crypto-linked derivatives
The mechanism affects how closely the ETP follows the underlying cryptocurrency, what costs arise along the way, and which risks the structure introduces.
Spot crypto ETPs get their exposure by holding the underlying cryptocurrency.
BlackRock's iShares Bitcoin Trust ETF works this way. Shares track Bitcoin's spot price, and the fund holds the underlying bitcoin through Coinbase Custody.
The term physically backed comes from the traditional commodities market, but it effectively means the product is backed by actual units of the cryptocurrency.
This creates the most direct link between the ETP and the spot price of the cryptocurrency.
The actual returns for investors will differ, accounting for management fees, trading costs, cash balances, and other operating expenses of the crypto ETP.
Futures-based ETPs do not need to hold the cryptocurrency itself.
Instead, they hold futures contracts whose value is tied to the expected price of the cryptocurrency at a future date. These contracts expire.
To maintain exposure, the ETP has to periodically sell contracts approaching expiration and buy contracts with later expiration dates. This process is called rolling.
The prices of those contracts can differ from the current spot price:
Contango: Futures trade above the spot price. Rolling into more expensive contracts can reduce returns.
Backwardation: Futures trade below the spot price. Rolling can have the opposite effect.
As a result, a Bitcoin futures ETP can produce a different return from Bitcoin even when both move in the same general direction.
ProShares Bitcoin Strategy ETF is a popular ETP that holds Bitcoin futures contracts and rolls those contracts forward every month as they approach expiration.
Synthetic crypto ETPs use derivatives, such as swaps, to replicate the return of a cryptocurrency or crypto index without necessarily holding that asset directly.
For example, assume a Bitcoin ETP holds $10 million in cash or other collateral but wants exposure to Bitcoin.
It enters into a swap with a bank or another financial institution:
ETP > pays an agreed return or fee > Bank
Bank > pays Bitcoin's return > ETP
If Bitcoin rises 10%, the bank owes the ETP the corresponding return under the swap. If Bitcoin falls, the payment moves in the other direction according to the contract.
The bank takes the other side because the swap is a financial contract it prices for taking that exposure. It can also hedge its Bitcoin exposure elsewhere rather than simply betting against the ETP.
The ETP can therefore reproduce Bitcoin's price movements without owning Bitcoin directly.
The additional risk is the counterparty. If the institution cannot meet its obligations, the ETP could lose some or all of the return it is owed. Collateral is commonly used to reduce this risk.
Okay, if Bitcoin rises 10%, do all the ETPs also return 10%? Not really.
Enter the fees and costs of investing in crypto ETPs.
Crypto ETPs will rarely deliver exactly the same return as the cryptocurrency they track.
Some of that difference comes from visible costs such as management fees and trading spreads. The rest can come from how the product gets its exposure, how accurately it tracks its benchmark, and the price at which its shares trade.
Cost or fee | How it affects the investor |
|---|---|
Management or sponsor fee | Annual percentage deducted from the product's assets For instance, the IBIT ETF charges 0.25%. Futures-based BITO charges 0.95%. |
Bid-ask spread | Difference between the price available to buy and sell the ETP |
Brokerage commission | Fee charged by the broker for executing a trade, where applicable |
Currency conversion | Applies when the ETP trades in a different currency from the investor's account |
Fees do not tell the whole story. An ETP can also gain or lose less than the cryptocurrency it tracks.
Tracking difference: The difference between the ETP's return and its benchmark's return over a given period.
Tracking error: How much that difference fluctuates over time.
If Bitcoin gains 10% while a Bitcoin ETP gains 9.5%, the tracking difference is 0.5%.
For instance, a spot crypto ETF with a clean creation-redemption process tends to show tight tracking on both counts. However, a futures-based fund can post a large, and unstable, tracking difference because the roll cost that drives it changes with market conditions.
The exposure mechanism discussed earlier creates its own return differences:
Structure | What can affect returns? |
|---|---|
Spot/physically backed | Management, custody, trading, and operating costs |
Futures-based | Contract rolling, futures prices, and returns earned on collateral |
Synthetic | Swap pricing, financing costs, and other derivative expenses |
Tax treatment adds a final layer, and it varies by structure and jurisdiction.
A grantor trust, a fund, and a debt note can each generate a different tax outcome for the same investor holding the same amount of the same asset.
Fees and costs reduce investors' returns. Risks are present that can not only nullify returns but can affect invested funds too.
Crypto ETPs carry the market risk of the cryptocurrency they track plus risks introduced by the product itself.
Some apply across most crypto ETPs:
Market risk: The underlying cryptocurrency can lose value, sometimes sharply and within short periods.
Tracking risk: The ETP may not reproduce the return of its benchmark because of fees, trading costs, cash holdings, or its exposure mechanism.
Liquidity risk: Low trading activity or stressed markets can widen bid-ask spreads and make buying or selling more expensive.
Operational risk: Trading, custody, valuation, settlement, or other operational failures can disrupt the product.
Regulatory risk: Changes to securities, derivatives, or crypto rules can affect how an ETP operates, trades, or provides exposure.
The question worth asking isn't which product is risk-free. There is none. What helps is knowing which risk is worth taking on to earn a return on investments.
Crypto ETPs solve an old problem with a new asset: how to make an unfamiliar investment fit inside familiar financial infrastructure.
As the market develops, the wrappers will likely keep expanding.
More cryptocurrencies can become investable through exchange-traded securities.
Index products can package several assets together.
Staking can add another source of return.
New structures can change how exposure, custody, and redemption work. However, what doesn't change is how to read a new product when it shows up.
The same five questions apply regardless of what gets launched next.
What security is this: fund, note, or collateralized claim?
What does the investor actually own?
How does it build its exposure: spot, futures, or swap?
What costs and fees are attached to this product?
What risks are present?
Basics work. And trying to evaluate any crypto ETP there is on the basis of these questions will always help the investor make a fair evaluation.
No. ETP is the broad category. ETFs are one type of exchange-traded structure used to provide crypto exposure.
Often, yes, where regular ETFs are allowed. Direct cryptocurrency usually isn't. This is one of the main reasons investors choose the ETF route.
No. Investors own a security whose value tracks Bitcoin. The fund, trust, or issuer holds the actual asset or the contract referencing it.
The ETF is listed on a stock exchange, so it follows that exchange's hours. Bitcoin's price can move over a weekend before the ETF can react on Monday.
Yes, if the fees and other costs are more than the amount of Bitcoin's price going up.
Not inherently. ETPs remove direct key management but introduce risks involving custodians, issuers, counterparties, tracking, and market structure.
Crypto ETPs provide crypto exposure through brokerage accounts and traditional investment setups without requiring direct wallet or private-key management.
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