What are crypto ETPs & their benefits - a guide by CoinShares XBT Provider

Exchange Traded Products (ETPs) are a convenient, cost-efficient solutions for investors looking to access crypto within a regulated framework. How do they work, exactly? Could they be a worthwhile addition to your portfolio? This is what we will cover in this article. 

What are ETPs?

An exchange-traded product (ETP) is a type of financial instrument which is bought and sold on a regulated stock exchange that allows investors to gain exposure to the price movements of an underlying benchmark or asset without having to own the asset itself. 

Initially created to provide investors with access to equity indices, ETPs have expanded to become the primary vehicle for listed exposure to almost every asset, including crypto. Just like stocks and shares, you can buy and sell ETPs through your broker.

ETPs are not a new invention. In fact, the world’s first ETP recently celebrated its 30yr birthday. 

Asset under management (AUM) in ETPs have been steadily rising in value as they become increasingly popular with investors across the globe. According to research firm ETFGI, there were 13,198 ETPs listed at the end of December 2024.

How are ETPs structured?

‘ETP’ is an umbrella term covering several types of exchange-traded financial products, and can include exchange-traded funds (ETFs), exchange-traded commodities (ETCs), and exchange-traded notes (ETNs). 

An ETP’s aim is to provide or replicate the return of an underlying benchmark or asset. To do this, they employ one of two replication methods: physical or synthetic.

How do crypto ETPs work?

Crypto ETPs, or cryptocurrency exchange-traded products, have seen an exponential rise of their own. According to ETFGI, assets invested in crypto ETFs and ETPs globally reached $91.69 billion as of July 2024, up from $15.12 billion at the end of 2023. In Europe alone, the number of crypto ETPs has continued to grow, with over 210 products available as of February 2025. And this market segment is thriving: a total of 235 active crypto exchange-traded products have been released globally across 22 exchanges in 16 countries.

Similar to other ETPs, crypto ETPs are investment products that provide exposure to the performance of an underlying asset. Synthetic crypto ETPs track the performance of underlying cryptocurrencies without directly owning them. Instead, each time a synthetic crypto ETP is purchased, an obligation is created to pay the investor an amount based on the performance of the relevant digital currency, minus the applicable fee.

Physical crypto ETPs are backed by an equivalent amount of the underlying asset. This means that for each investment in one of these ETPs, the corresponding amount is transferred to the issuer and stored with institutional-grade custodians. And they are also listed and traded on a securities exchange.

Do I actually own crypto when I buy a crypto ETP?

When you buy a crypto ETP, whether synthetic or physical, you do not own the cryptocurrency directly. Instead, in the case of synthetic crypto ETPs like CoinShares XBT Provider Tracker ETPs, you own a debt security from the issuer, which is backed or hedged by collateral. Hedging positions backing the ETPs are disclosed on a daily basis by LedgerLens, an external partner ensuring complete transparency regarding collateral and reserves, and accessible on CoinShares XBT Provider website.

In contrast, physical crypto ETPs, like CoinShares XBT Provider Physical ETPs or CoinShares Physical ETPs, are backed by actual holdings of the underlying digital asset, which are stored with institutional-grade custodians, but do not provide direct possession of the crypto asset.

Why gain exposure to crypto through ETPs?

There are several key elements that make crypto ETPs appealing to investors, especially those relatively new to crypto or looking for a straightforward addition to their existing portfolios. 

ETPs are true investment-enablers for multiple asset classes

ETPs open up access to a variety of asset classes in a liquid, exchange traded, secure wrapper. 

Gold is a good example of how ETPs have helped investors access a difficult asset class.
Prior to the introduction of gold ETPs, owning gold cost-effectively was no easy task: you either needed to buy (and store) bars, or buy shares in mining companies. Direct investment was something mostly done by large institutions. But investing in a gold ETP is an entirely different process - investors simply have to buy the product via their broker and add it to their existing portfolio, it will replicate gold’s valuation. 

Crypto ETPs offer the same hassle-free route towards crypto exposure, notably to Bitcoin & Ether, the two leading digital assets.

Crypto ETPs are regulated, traditional investment products

It is no secret that crypto exchanges have a sulphurous reputation in the ecosystem, with many still unregulated or in the process of becoming so. Major crises such as the collapse of FTX in late 2022, which led to billions of dollars in losses, or the recent crackdown by U.S. regulators on Binance US and its prosecution with Coinbase, have proven that this mode of entry should be carefully considered.

However, while investing in volatile crypto can be a wild ride, how you invest does not have to be. Crypto ETPs (Exchange-Traded Products) remove investors’ dependence on crypto exchanges altogether. Instead, investors find themselves with time-tested, regulated traditional investment products—ETPs like those offered by CoinShares XBT Provider, which has been around since 2015. These ETPs are supervised by local listing authorities, such as the SFSA (Swedish Financial Supervisory Authority) in Sweden, and are traded on major financial exchanges (such as Nasdaq Stockholm). In addition, European Union’s MiCA regulation, effective from 2024, provides a robust legal framework for crypto investments, further reassuring investors by establishing clear rules for the sector’s operation and investor protection.

While the crypto market has faced significant challenges, its path to maturity continues. Investors are increasingly turning to regulated, secure investment vehicles like ETPs to gain exposure to crypto assets without the risks associated with unregulated exchanges.

Crypto ETPs: accessible on your brokerage account, fully portfolio-compatible

The world of crypto can feel daunting to navigate, but ETPs take away a big part of that complexity. Instead of surfing on non-regulated or under-regulated crypto exchanges or paying high fees for legacy funds dabbling in crypto, investors can buy ETPs via their traditional bank, broker or investment platform during market trading hours in the same way they would buy stocks and shares. This kind of exposure also eliminates the friction of storing the underlying asset in self-custody wallets—a method that carries several risks, including loss, accidents, hacks, and theft: it is estimated that between 1.5 million and up to 4 million bitcoins have been lost due to negligence, forgotten passwords, and—less trivially—the deaths of owners without a transfer plan in place. Meanwhile, intelligence firm Chainalysis reported that $2.2 billion worth of crypto assets were stolen in 2024. In this context, crypto ETPs appear as one of the safest ways to gain exposure to digital assets. 

The ETP then sits alongside all the other investments in their portfolio in a single account, where it’s easier to analyse and compare products. And even though brokers will generally not offer investment advice, they typically offer a higher level of customer support compared to crypto exchanges. 

How to buy an ETP via your online investment platform?

1. Login to your online broker’s account or app

2. Search for the product name, ISIN code, or ticker symbol of your chosen ETP

3. Choose the notional amount or number of securities you wish to buy

4. Place the execution order

Conclusion: looking to get started with crypto ETPs?

We have seen crypto ETPs offer security, as they are regulated securities with a bankruptcy-remote structure. They are also easy to access, and then integrate into one’s portfolio. But that’s not all: ETPs are a great option to own crypto without the complexity of self-custody, and they typically enjoy greater liquidity levels than some crypto. 

Interested in adding crypto ETPs to your portfolio? You can check CoinShares's XBT Provider current ETP offering, fees and prices on our website.