What is a crypto ETP: types, advantages, and disadvantages

Traditional financial markets offer dozens of different trading instruments. As the digital asset market has developed, these instruments have also entered the crypto industry.

One such instrument is the crypto ETP, which provides exposure to digital assets through the familiar infrastructure of the traditional stock market.

According to 21Shares' estimates as of May 2026, the total crypto ETP market was valued at approximately $140 billion, of which around $110 billion was accounted for by Bitcoin products.

What is an ETP in cryptocurrency?

ETP in crypto stands for "Exchange-Traded Product". Crypto ETPs trade on stock exchanges throughout the trading session, similar to other exchange-traded assets such as stocks.

A crypto ETP tracks the price of either a specific cryptocurrency or a basket of assets, such as leading altcoins. An ETP is a category of exchange-traded instruments issued by an investment company, bank, or special-purpose legal entity.

ETPs in cryptocurrency may be backed either by digital assets themselves or by derivative financial instruments such as:

• Futures* and perpetual contracts*;
• Cryptocurrency swaps;
• Shares of companies associated with digital assets.

* Futures are derivatives contracts under which the parties agree to buy or sell an asset in the future at a predetermined price. In the crypto market, they allow investors to gain or lose from changes in the value of a cryptocurrency without having to own it directly.

* Perpetual contracts are derivative financial instruments similar to futures but without an expiration date. Their price is kept close to the value of the underlying asset through a mechanism of periodic payments between market participants.

How is a crypto ETP different from an ETF?

ETP (Exchange-Traded Product) is a general term for exchange-traded products that are traded on stock exchanges. An ETF (Exchange-Traded Fund) is one type of ETP.

In other words, the concept of an ETP is broader than that of an ETF. In addition to ETFs, ETPs may include:

• ETN (Exchange-Traded Notes) — exchange-traded notes representing debt obligations of the issuer, with returns linked to a particular asset or index;
• ETC (Exchange-Traded Commodities) — exchange-traded products designed to track the value of commodities such as gold or oil.

The same logic applies to the digital asset market. A crypto ETP is a general term for exchange-traded products linked to cryptocurrencies. A crypto ETF is one type of such product.

How does a crypto ETP work?

A crypto ETP does not allow investors to directly purchase and, consequently, own the digital asset represented by the fund. Essentially, a crypto ETP represents a share, with each share corresponding to a specific coin or token, or to a derivative financial instrument contract.

The issuers of crypto ETPs hold the cryptocurrencies themselves, while ETP investors only gain exposure to changes in the price of the crypto asset tracked by the specific instrument.

Investors can buy and sell crypto ETPs through a separate brokerage account on the stock exchange. This eliminates the need for investors to register accounts on cryptocurrency exchanges.

Types of ETPs in cryptocurrency

Spot crypto ETP

A spot crypto ETP holds the actual cryptocurrency whose price it tracks, such as Bitcoin (BTC) or Ethereum (ETH). The value of shares in spot crypto ETPs follows the price of the underlying asset, which is the key feature of this instrument.

The spot ETP in the crypto market is supported by an infrastructure consisting of several participants:

• Issuers responsible for launching crypto ETPs, such as BlackRock, 21Shares, and Fidelity;
• Custodians that hold digital assets backing ETPs in cryptocurrency;
• Authorized participants that create and redeem large blocks of shares;
• The stock exchange on which crypto ETP shares are traded;
• Calculation agents and price data providers.

Futures-based crypto ETP

Unlike a spot product, a futures-based crypto ETP does not hold the underlying asset itself. Instead, the issuer purchases futures contracts whose prices are linked to the future value of the underlying cryptocurrency.

Futures-based crypto ETPs may provide higher returns than investments in digital assets on spot markets. However, they also involve additional risks associated with:

• Contango*;
• Backwardation*;
• The cost of regularly rolling over contracts;
• The difference between the futures price and the value of the underlying cryptocurrency itself.

* Contango is a situation in which the price of a futures contract is higher than the current spot price of the underlying asset. When such contracts are regularly rolled over, this can create additional costs for the investor.

* Backwardation is a situation in which the price of a futures contract is lower than the current spot price of the underlying asset. It is the opposite of contango.

Basket-based (index) and thematic ETPs in crypto

This type of ETP in crypto represents not a single asset but a diversified basket consisting of several cryptocurrencies, such as BTC, ETH, XRP, and SOL. This approach reduces dependence on the performance of one specific cryptocurrency: a decline in the value of one asset may be partially offset by growth or more stable performance from other assets in the basket.

However, broader market risks remain when investing in index-based crypto ETPs. For example, during periods of correction in the crypto market, the prices of Bitcoin and major altcoins may decline at the same time.

Staking ETPs in crypto

This type of crypto ETP allows investors to receive rewards as though they were holders of cryptocurrency that has been committed to staking* on a blockchain.

* Staking is a mechanism used in blockchains operating under the Proof-of-Stake consensus algorithm and its variants. Cryptocurrency holders lock up or delegate their coins to help secure the network and validate transactions, receiving rewards in return. In a staking ETP, the issuer or an operator engaged by the issuer performs this function.

This approach can reduce the fees investors pay for the management and servicing of a crypto ETP: staking income may partially offset the costs of managing and servicing the crypto ETP.

Advantages and disadvantages of ETPs in cryptocurrency

One of the main advantages of a crypto ETP is that it can simplify investing in digital assets for users who are not very familiar with cryptocurrencies. ETPs simplify not only the investment process itself but also access to the digital asset market.

In addition, an ETP reduces risks associated with storing crypto assets. When using a crypto ETP, the issuer or its affiliated entities, such as custodians, handle the storage of digital assets.

A crypto ETP can also serve as a diversification and risk-hedging tool, offering additional protection against the high volatility of digital assets.

However, a crypto ETP also has disadvantages, including custodial storage. In other words, the investor does not directly own the crypto assets and must entrust custody to third parties, which involves risks such as the bankruptcy of the crypto ETP issuer and the freezing of its accounts.

When using a crypto ETP, investors also remain exposed to the risks of investing in crypto assets themselves. Cryptocurrencies are highly volatile: their value can change by tens of percent in either direction over a short period.

ETPs in crypto vs. direct ownership of cryptocurrency

Direct ownership of cryptocurrency is best suited to long-term investors who prioritize secure storage and independence from custodians that control digital assets.

It should also be taken into account that an ETP in crypto does not provide direct access to instruments in the decentralized finance (DeFi) market, such as:

• Staking;
• Liquidity mining and yield farming*;
• Lending and other activities.

* Yield farming is a way of earning income in decentralized finance (DeFi), in which a user deposits crypto assets into various protocols, such as liquidity pools or lending services, and receives rewards in return.

Crypto ETPs may be convenient for investors who want exposure to the performance of digital assets through the familiar infrastructure of the stock market.

Investors buy and sell crypto ETPs through a brokerage account, so they don't need to create a crypto wallet, store private keys, or arrange security for their digital assets.

In addition, the exchange-traded format makes it easier to include cryptocurrency in a traditional investment portfolio, making a crypto ETP a convenient instrument, including for institutional investors operating within regulated financial infrastructure.

What crypto ETPs are available on the market?

As of September 2026, there are dozens of different ETPs in crypto, including:

• CoinShares ETPs — a leader by total assets among exchange-traded products in Europe;
• Bitcoin ETP from investment company 21Shares — one of the largest exchange-traded products in the EU market;
• Hyperliquid Staking ETP — an exchange-traded product from Hyperliquid that also allows investors to receive staking rewards;
• iShares Bitcoin ETP, launched by BlackRock, the world's largest investment company.

Some investment companies have launched several exchange-traded products at once. For example, Bitwise launched seven crypto ETPs on Nasdaq.

Another well-known company, Valor, has launched 87 cryptocurrency ETPs, making it one of the leaders in Europe by the number of ETPs offered.

In addition to its Bitcoin ETP, 21Shares has also launched products based on other cryptocurrencies, including Ethereum, XRP, Solana, and Dogecoin. The total number of crypto ETPs offered by 21Shares has already exceeded 60.