Crypto ETFs: what the fund actually holds and what you pay to the coin holder

A crypto ETF is an exchange-traded fund whose units trade like an ordinary share, backed either by the coin itself held in a custodian's accounts or by derivatives on it. Buying such a unit gives you neither a private key nor a wallet address: what you get is a claim on the fund's structure, which is obliged to hold the backing assets and disclose what they consist of. For an investor in Russia, the key issue here is not the coin's price but the access route: there is no spot crypto fund on Russian organised trading venues, and foreign fund units are foreign securities with their own admission rules. To see what is genuinely available through Russian market infrastructure, check the exchange-traded funds section — it reflects what actually trades, not what the headlines say.

What sits inside: spot, futures, proxies

The distinction between "spot" and "futures" is the single most important point in this topic, and it shapes almost everything else.

A spot fund holds the coin directly. Its job is to ensure that each unit corresponds to a known fraction of a coin, minus accrued fees. Such a fund mechanically tracks the price of the underlying asset, and any gap arises only from costs and from the way the units themselves trade.

A futures fund holds not the coin but futures contracts on it. A contract runs until its expiry date, after which the position has to be rolled into the next one — and on every roll the fund either loses or gains on the price difference between the front-month and the deferred contract. Over a long horizon this gap compounds and can pull the fund's performance away from that of the coin itself in either direction. A crypto futures fund is not a substitute for a spot fund, even if its name carries the name of the same coin.

"Proxies" are a separate category — ordinary shares of companies whose business is tied to cryptocurrency: mining, exchanges, payment infrastructure, corporate balance sheets with coins on them. This is not a fund on the coin but equity risk with crypto beta: on top of the moves in the underlying asset come operating costs, debt and management decisions. These securities are analysed with the same methods as any other stock — see the equities section.

Where the gap between the unit price and the coin price comes from

The unit trades on an exchange, while the backing assets are revalued according to the fund's own calculation. The two prices do not converge automatically but through the creation and redemption mechanism: authorised participants may create new units by delivering backing assets to the fund, or redeem units and receive the backing assets in return. As long as this mechanism works, arbitrage squeezes the gap down to the cost of the transaction. When it stumbles — a technical failure at the custodian, a suspension of orders, an illiquid market in the underlying asset outside trading hours — the unit starts trading at a premium or a discount to its backing, and the buyer pays that difference out of their own pocket.

The form of settlement on unit creation also matters. If the fund accepts and delivers the coin itself, the chain is short. If settlement is in cash, the fund has to go to the coin market itself, and its execution costs become your costs.

Who holds the coin and what risk exactly you carry

A spot crypto fund has a custodian — the organisation where the coins physically sit in cold wallets. This introduces a risk that a fund holding shares does not have: a lost key cannot be recovered. That is why, in the fund's documents, it makes sense to look not for promises but for specifics — who the custodian is, whether the fund's assets are segregated from the custodian's own, who confirms that the backing exists and how, whether there is insurance cover and against which events exactly.

The legal framework in Russia

Russian regulation separates two things that are often confused in everyday usage. The circulation and issuance of digital rights are governed by Federal Law No. 259-FZ of 31 July 2020, and this law explicitly prohibits using digital currency as a means of payment for goods and services within the country. But buying a unit of a foreign exchange-traded fund is not a payment in coins; it is a transaction in a foreign security, and it is subject to the rules on admitting non-qualified investors to foreign instruments, as well as to current infrastructure restrictions on custody and settlement.

An honest caveat is needed here: the factual basis for this article does not include a specific list of crypto funds available today through Russian brokers, and I will not make one up. Admission status changes with decisions by the regulator and by the brokers themselves — check the latest market news and ask your broker directly.

Taxes and costs

Income from selling fund units is income from transactions in securities, with acquisition costs deductible. The tax base is calculated under the rules for the investment tax base, whose value and source the site gives separately: 13%. If the units were bought through foreign infrastructure, you also face self-filing of a tax return and the question of withholding tax at source in the fund's country.

Costs at crypto funds are structured more harshly than at index funds. The management fee is deducted from the backing assets, so the fraction of a coin per unit shrinks slowly on its own. On top of that come the exchange spread, the premium or discount to the backing at the moment of the trade and — for futures funds — the cost of rolling the position. Funds should be compared on the sum of all these layers, not on the single line showing the fee.

What to check before the trade

Step 1 — establish whether the fund is spot or futures-based, and stop treating the two as interchangeable. Step 2 — identify the custodian and the procedure for verifying the backing. Step 3 — look at the liquidity of the unit itself, not just of the coin: a tight spread in the underlying asset does not guarantee a tight spread in the fund. Step 4 — confirm admission and the settlement infrastructure for your investor status. Step 5 — understand the tax treatment in advance, because it depends on where and through whom the unit was bought.

The terminology found in fund documents is easy to check against the glossary, and the calendar side of the work — disclosure dates and corporate events for traded securities — against the events calendar.

A crypto ETF does not make crypto safer. It changes the set of risks: instead of the risk of losing your key, you take on custodian risk, the risk of the unit creation mechanism and the risk of regulatory access — and you pay a standing fee for this out of the backing. It is a sensible trade-off for someone who wants to hold the position in a brokerage account with familiar reporting, and a pointless one for someone who expected the wrapper to remove the volatility of the underlying asset. It does not remove it.