A cryptocurrency exchange-traded fund (ETF) is a type of investment that gives investors exposure to a digital asset (or group of them) without having to directly buy and store the digital assets themselves.

Similar to traditional ETFs, a crypto ETF pools funds from multiple investors and uses these funds to invest in one or more cryptocurrencies, which are held by an asset manager. The ETF is then listed and traded on traditional stock exchanges, providing investors with a convenient way to buy and sell shares in the fund just like they would with any other stock.

The advantage of a crypto ETF lies in its simplicity and accessibility. Instead of dealing with the complexities of purchasing and securing individual cryptocurrencies, investors can rely on the expertise of fund managers to handle this. Furthermore, it offers a level of regulatory oversight and transparency, which can be reassuring for more risk-averse investors.

Leading global asset management firms such as BlackRock and Fidelity have filed Bitcoin ETF applications in the U.S. If the SEC approves them, these ETFs should help improve consumer confidence in crypto. A positive public and government reaction to ETFs could also boost bitcoin liquidity and bullishly impact prices.