What Is a Bitcoin ETF?

 Bitcoin ETFs allow investors to gain exposure to the leading cryptocurrency without having to actually own it.

A bitcoin exchange-traded fund (ETF) lets traders gain exposure to BTC via traditional stock markets, without needing to directly buy or sell the digital asset on a cryptocurrency exchange.

A bitcoin ETF is an exchange-traded fund that specifically tracks the price of the leading cryptocurrency and allows traders to purchase or sell the security on a stock exchange throughout the day. They can be cash-settled or physically settled, meaning investors will receive either fiat currency or actual bitcoin upon exiting, respectively.

ETFs are regulated traditional financial products and can be bought through a number of retail-friendly mobile trading apps, including Robinhood, Trading212, TD Ameritrade and Fidelity. The most popular ones track major stock indexes, such as the Standard & Poor’s 500 Index, or other traditional assets and commodities like oil and gold.

What are the pros and cons of trading ETFs?

While it might seem counterintuitive to invest in a bitcoin ETF rather than buy actual bitcoin, there are a number of advantages to doing it this way, namely:

• No need to go through the process of having to store crypto safely yourself
• Buying an ETF through an online broker is significantly more secure, faster and less prone to outages than purchasing digital assets directly from a crypto exchange
• There are much clearer tax implications and guidance for traditional financial products than digital assets