The Future of Crypto ETFs: What Advisors Need to Know

As we begin the new year, we are excited to share crypto insights with advisors every Thursday. This issue features Roxanna Islam from TMX VettaFi, who provides an in-depth look at the world of crypto ETFs, reviewing 2024 and anticipating 2025. Additionally, Griffin Kelly from The Daily Upside addresses ETF-related questions in the Ask an Expert section. In the broader crypto landscape, ETFs may have taken a backseat to other trends, such as the potential for a strategic bitcoin reserve, growing interest in tokenization, and the intersection of energy and crypto. However, for advisors, retail investors, and many institutional investors, ETFs serve as a crucial bridge between traditional finance (TradFi) and decentralized finance (DeFi), ensuring their continued relevance in the digital asset narrative of 2025. As crypto innovation is poised to persist, the ecosystem of crypto ETFs is also expected to grow. This overview examines the state of crypto ETFs in 2024 and what to anticipate in 2025. Looking back at 2024, several key figures highlight the impact of crypto ETFs. As of December 26, various interesting statistics emerged. Moving into 2025, numerous ETF filings are at different stages of approval. With the new U.S. administration, which is perceived as crypto-friendly, and changes in SEC leadership, issuers are developing a pipeline of potential new products. There are three primary areas to monitor. Firstly, the possibility of more spot ETFs beyond bitcoin and Ether is on the horizon. VanEck, 21Shares, and Canary Capital have filed for crypto ETFs, including spot Solana and XRP ETFs. Canary Capital has also filed for a Litecoin ETF and an HBAR ETF. Furthermore, innovation in packaging digital assets within ETF wrappers is anticipated. This includes filings for several crypto index ETFs (multi-token funds). One proposed fund is the Bitwise Bitcoin and Ethereum Fund, offering balanced exposure to both currencies. There have been requests to convert the Grayscale Digital Large Cap Fund (GLDC) and the Bitwise 10 Crypto Index Fund (BITW) into ETFs. These are multi-token funds holding bitcoin, Ether, Solana, and more. Lastly, there's the category of everything else, which encompasses a wide range of possibilities. For example, the Nexo 7RCC Spot Bitcoin and Carbon Credit Futures ETF is an ESG Bitcoin ETF that will hold about 80% bitcoin and 20% carbon credit futures. The Bitwise Bitcoin Standard Corporations ETF aims to invest in corporations that hold at least 1,000 bitcoin in their corporate treasury. The Strive Bitcoin Bond ETF seeks to provide exposure to convertible securities issued by MicroStrategy. Additionally, options-based strategies and crypto equities, which have seen renewed interest due to MicroStrategy and crypto miners pivoting to benefit from data center demand, are expected to expand. -Roxanna Islam, Head of Sector & Industry Research, TMX VettaFi In the Ask an Expert section, Griffin Kelly addresses questions about the status and future of the global ETF industry, the impact of America's approval of bitcoin and Ether ETFs, and the potential for ETFs to track smaller cryptocurrencies.