The much anticipated crypto exchange traded funds (ETF) is now on its next phase of adoption as the SEC approved the first spot crypto ETF early this year. Crypto ETFs are now available in the securities market to give bitcoin retail traders the chance to gain from BTCs by merely speculating on the prices and without owning the crypto asset,
So far however, the crypto ETFs have yet to break out of its mould by reaching wider adoption. Proponents of the derivative believe that the key to reach everyday retail investors is to gain the support of financial advisers. That way, trading can expand and go beyond the crypto-native investor base and hedge fund investors who pooled more than 60 billions-worth of cryptocurrency to set up the spot ETF trading scheme.
Although the Securities and Exchange Commission granted authorization for the derivatives, the Commision did so under pressure after the D.C. Circuit Court of Appeals came out in 2023 with a ruling in favor of spot crypto ETFs.

How Exactly Do Crypto ETFs Work?

Just like any derivatives, crypto ETFs are also traded in regular stock exchanges, and can be held by investors in standard brokerage accounts to be used in spot Crypto ETF trading. Crypto exchange products have share prices that reflect changes in the price of derivatives and not the crypto assets themselves. That being the case, a given cryptocurrency ETF will have a share price that rises and declines in line with the future contract price of the related crypto.

However, the SEC warns that investing in crypto ETFs presents additional risk due to lack of regulatory oversight, particularly from the crypto exchange from where the valuation of funds will be derived.

Crypto ETFs, Speculating on Future Crypto Prices, spot Crypto ETF trading