The rise of cryptocurrency exchange-traded products (ETPs) has opened new doors for both retail and institutional investors seeking regulated, accessible exposure to digital assets. As the highly anticipated U.S. bitcoin spot ETF approval looms—expected in early 2025—understanding the current landscape of crypto ETPs is more important than ever. These financial instruments have evolved significantly since the first product launched in 2015, expanding globally and laying the foundation for broader market adoption.
This article explores the structure, growth, key players, and regional dynamics shaping the crypto ETP ecosystem. We’ll also examine how innovation and competition are driving down fees and increasing investor accessibility—setting the stage for what could be a transformative year in digital asset investing.
What Are Cryptocurrency ETPs?
Exchange-traded products (ETPs) are financial instruments traded on regulated stock exchanges during normal market hours. They track the performance of an underlying asset, index, or basket of assets. In the context of crypto, ETPs allow investors to gain exposure to digital currencies like bitcoin and ether without directly holding or managing private keys.
There are three primary types of ETPs:
- Exchange-Traded Funds (ETFs): Investment funds that hold physical assets.
- Exchange-Traded Notes (ETNs): Debt securities issued by financial institutions.
- Exchange-Traded Commodities (ETCs): Typically used for commodities like gold or oil.
While "ETP" is often used as an umbrella term, it frequently refers specifically to debt-based structures such as ETNs and ETCs in European markets. ETFs dominate the global ETP landscape, representing approximately 98% of total assets under management (AUM), which stood at $10.99 trillion as of November 2023 (ETFGI).
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The Evolution of Crypto ETPs
The first bitcoin-tracking ETP was launched in 2015 by XBT Provider on Sweden’s Nasdaq. Growth remained steady until late 2020, when momentum accelerated with increased participation from both crypto-native firms and traditional financial institutions.
By November 2023, there were 176 crypto ETFs and ETPs globally, up from just 17 at the end of 2020. Assets invested in these products surged by 120% year-to-date, reaching $12.73 billion from $5.79 billion at the end of 2022.
Canada led the innovation curve by launching the world’s first bitcoin ETF—Purpose Bitcoin ETF—in February 2021. The U.S., meanwhile, only approved futures-based bitcoin ETFs starting in October 2021, with ProShares’ BITO becoming one of the fastest-growing ETF launches in history.
Why Invest in Crypto ETPs?
For many investors, especially those within traditional finance systems, ETPs offer a familiar and compliant pathway into crypto markets. They eliminate the need for self-custody, technical setup, or navigating volatile over-the-counter (OTC) trading platforms.
Key benefits include:
- Regulatory oversight: Listed on major exchanges with transparent reporting.
- Accessibility: Available through standard brokerage accounts.
- Security: Backed by institutional-grade custodians like Coinbase and Fidelity Digital Assets.
- Diversification: Access to baskets, leveraged positions, or staking-enabled products.
However, trade-offs exist:
- Higher expense ratios compared to traditional ETFs (though declining).
- Limited trading hours compared to 24/7 crypto markets.
- Counterparty risk in synthetic structures.
- Geographic restrictions—e.g., European ETPs are generally not available to U.S. retail investors due to SEC regulations.
How Crypto ETPs Are Structured
Crypto ETF Structures
Most crypto ETFs fall into two categories:
- Spot ETFs: Hold actual cryptocurrency, securely stored by third-party custodians. These provide direct price exposure and are considered more transparent.
- Futures ETFs: Track bitcoin futures contracts traded on regulated exchanges like CME. These involve roll costs and tracking errors but avoid direct custody challenges.
In jurisdictions like the EU, ETFs often follow UCITS regulations, requiring diversification (no single asset over 10% of holdings). This makes pure spot bitcoin ETFs incompatible under current rules—a key reason Europe lacks true spot crypto ETFs.
Crypto ETP Structures (Debt-Based)
Outside North America, most crypto ETPs are structured as debt securities:
- Physical ETPs: Fully backed by real crypto assets held in custody. Lower counterparty risk.
- Synthetic ETPs: Use derivatives or swaps to replicate price movements. Higher risk due to issuer dependency.
Despite structural differences, most investors favor physically backed products for their transparency and security.
Major Players and Market Leaders
As of early 2025, ProShares Bitcoin Strategy ETF leads in AUM with $1.68 billion—despite being futures-based. Among the top 14 crypto ETPs by assets:
- 9 track bitcoin (64%)
- 3 track ether
- 1 each for Solana and BNB
Notable issuers include 21Shares, CoinShares, Purpose Investments, Hashdex, and traditional giants like Fidelity, VanEck, and BlackRock—the latter having filed for a spot bitcoin ETF that could redefine market dynamics.
Staking-enabled products are also gaining traction, with 14 offerings globally—13 ETPs and 1 ETF—allowing investors to earn yield without managing validator nodes.
Key Service Providers Behind the Scenes
Every ETP relies on a network of specialized partners:
- Custodians: Coinbase, BitGo, Gemini, Fidelity Digital Assets
- Market Makers: Flow Traders, GHCO
- Authorized Participants (APs): Virtu Financial, DRW, Morgan Stanley
- Index Providers: CF Benchmarks, MarketVector, Bloomberg
- Trustees & Administrators: Law Debenture, State Street, BNY Mellon
These entities ensure liquidity, compliance, accurate pricing, and investor protection across jurisdictions.
Regional Landscape of Crypto ETPs
Europe
Europe pioneered crypto ETPs with Sweden’s early adoption. The EU’s “passporting” system allows cross-border distribution once approved in one member state. However, UCITS rules limit single-asset exposure, hindering spot bitcoin ETF approvals. The European Securities and Markets Authority (ESMA) is reviewing potential updates by late 2025.
Switzerland
A leader in innovation, Switzerland hosts 21Shares’ physically backed multi-asset crypto ETPs. SIX Swiss Exchange requires underlying assets to rank among the top 15 by market cap—a benchmark ensuring quality and liquidity.
United Kingdom
The FCA banned retail sale of crypto derivatives in 2020. As a result, crypto ETPs listed on Aquis Exchange are restricted to professional investors only.
Canada & Brazil
Canada launched the world’s first bitcoin and ether ETFs. In 2023, 3iQ introduced North America’s first staking-enabled ether ETF. Brazil followed with its own ETF approvals through CVM-regulated issuers like Hashdex.
United States
The U.S. has approved only futures-based crypto ETFs so far. But change is imminent: 11 issuers—including BlackRock, Fidelity, and Grayscale—are awaiting final SEC approval for spot bitcoin ETFs. All have shifted to cash-based creation/redemption models per SEC guidance—a move likely aimed at limiting direct crypto exposure for banks.
Market expectations point to approvals around January 10, 2025, with trading beginning shortly after.
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Hong Kong
Following U.S. developments, Hong Kong’s SFC began accepting spot crypto ETF applications in late 2023. Southern Asset Management launched futures-based funds in 2022, and several spot ETF filings are now under review—open only to professional investors unless locally authorized.
Fees and Competitive Dynamics
Early crypto ETPs charged up to 2.5% annually—far above traditional ETF norms (0.05%–0.75%). But rising competition is driving rapid fee declines. For example:
- Fidelity’s proposed spot bitcoin ETF: 0.39%
- Invesco/Galaxy: Waived fees for first six months and first $5B AUM
With BlackRock reportedly preparing $2 billion in seed capital, the race for dominance is intensifying—potentially reshaping long-term investor behavior.
What’s Next for Crypto ETPs?
Several trends will define the future of crypto ETPs:
- Fee wars accelerating product innovation and accessibility
- Growing institutional adoption, driven by trusted brands like BlackRock
- Expansion of staking-enabled products offering yield without complexity
- Integration into wealth advisory platforms
- On-chain structural evolution, such as 21.co’s collaboration with Index Coop
As regulatory clarity improves and infrastructure matures, crypto ETPs are poised to become a core component of diversified portfolios.
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Frequently Asked Questions (FAQ)
Q: What’s the difference between a crypto ETF and an ETP?
A: An ETF is an investment fund that holds assets directly. An ETP is a broader category that includes ETFs as well as debt-based instruments like ETNs and ETCs. In practice outside the U.S., "ETP" often refers to non-fund structures.
Q: Are spot or futures crypto ETFs better?
A: Spot ETFs offer direct exposure to crypto prices and are generally preferred for long-term investing. Futures ETFs can suffer from roll costs and tracking error but may be easier to regulate due to existing futures market frameworks.
Q: Can U.S. investors buy European crypto ETPs?
A: Generally no—most European ETPs aren’t registered under U.S. securities law (Securities Act of 1933), making them unavailable to American retail investors.
Q: Who benefits from lower ETP fees?
A: All investors benefit from reduced costs over time. Lower fees increase net returns and make crypto exposure more competitive with traditional asset classes.
Q: What role do authorized participants play?
A: Authorized participants (APs) create and redeem shares in large blocks (creation units), helping maintain price alignment between the ETP and its underlying asset through arbitrage mechanisms.
Q: Will ethereum spot ETFs launch soon?
A: Multiple issuers—including BlackRock and Fidelity—have filed applications. The first SEC decision deadline is May 23, 2025, suggesting potential launches later that year if approved.
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