A Crypto ETF (Exchange-Traded Fund) is a regulated investment fund that tracks the price of cryptocurrencies and trades on traditional stock exchanges like the NYSE or NASDAQ. Rather than buying and securing crypto directly, investors purchase ETF shares through regular brokerage accounts, gaining exposure to crypto prices with the convenience of traditional investing, regulatory protections, and tax reporting. ETFs can hold actual cryptocurrency (spot ETFs) or derivatives contracts (futures ETFs).
Example:
The iShares Bitcoin Trust (IBIT) is a spot Bitcoin ETF trading at around $48 per share. An investor buying 100 shares for $4,800 gains exposure equivalent to approximately 0.05 BTC without needing a crypto wallet or exchange account. The ETF holds actual Bitcoin, charges a 0.25% annual management fee, and can be held in retirement accounts.