5 Best Cryptocurrency ETFs to Buy In 2022 USA

These crypto ETFs are worth a look.

Grayscale recently launched a lawsuit against the U.S. Securities and Exchange Commission. The reason? 

The regulator's refusal to convert Grayscale's flagship fund, the Grayscale Bitcoin Trust (ticker: GBTC), to an open-ended exchange-traded fund, or ETF. 

GBTC is currently a closed-end fund, meaning that it can sometimes trade at a premium or discount to its net asset value, or NAV. This is generally undesirable for investors. Conversely, open-ended ETFs avoid this problem.

 So hopes for a U.S.-listed spot Bitcoin (BTC) ETF have so far been dashed. Still, there are a variety of ETFs that U.S. investors can use to gain crypto exposure in a regular brokerage account, without the need for a cryptocurrency exchange or self-custody. 

Here are the seven best cryptocurrency ETFs to buy in 2022.

#1. ProShares Bitcoin Strategy ETF (ticker: BITO)

The cryptocurrency market has a substantial secondary derivatives market. Traders often use derivatives like futures to speculate or hedge risk. A great example here is BITO, which uses Bitcoin futures contracts to mimic the spot price of Bitcoin. Futures contracts don't always track the spot price accurately, with the difference expressed as a "tracking error." Nonetheless, BITO has done a great job of tracking Bitcoin's price since its inception. BITO is down 56.7% year to date, nearly matching Bitcoin's 56.1% fall. The difference is likely due to BITO's fees. BITO has an expense ratio of 0.95%, or around $95 in annual fees for a $10,000 investment.

#2. Grayscale Bitcoin Trust (GBTC)

As noted earlier, GBTC is not technically an ETF. However, the fund trades on exchanges and can be easily purchased via most brokerages. The fund does track the spot price of Bitcoin, meaning that it holds actual cryptocurrency in offline wallets with a custodian, called "cold storage." Currently, the ETF has $12 billion in assets under management, or AUM. Each share of GBTC corresponds to around 0.00091748 Bitcoin as of a recent check. However, the closed-ended structure of GBTC can cause its market price to trade at a premium or discount to its net asset value, depending on how demand trends. Currently, the fund is trading at a 36% discount to NAV due to various large-scale liquidations in the preceding months. Investors should be aware of this and check closely before investing. GBTC also costs a rather high expense ratio of 2%.

#3. Global X Blockchain ETF (BKCH)

Global X is a well-known provider of thematic ETFs. One of its most interesting funds tracks 24 blockchain-themed companies involved in the mining, development, promotion and advancement of cryptocurrency technology. Notable holdings include Riot Blockchain Inc. (RIOT) and Coinbase Global Inc. (COIN). While not a pure-play cryptocurrency ETF, BKCH offers good proxy exposure. Currently, the ETF has a 0.9 correlation with the price of Bitcoin. Investing in BKCH to gain exposure to cryptocurrency is akin to investing in a gold miner ETF to gain exposure to gold stocks. Because BKCH is still comprised of stocks, it tends to also have a higher correlation with the stock market. The ETF costs an expense ratio of 0.5%.

#4. Global X Blockchain & Bitcoin Strategy ETF (BITS)

Global X's other cryptocurrency ETF, BITS, holds BKCH as 50% of its underlying holdings. Then, the ETF puts its remaining 50% in cash collateral for a variety of Bitcoin futures contracts, similar to what BITO does. Thus, BITS offers investors a hybrid approach to cryptocurrency exposure, holding equal weights of equities and Bitcoin derivatives. Investors not comfortable holding a pure derivatives-based ETF like BITO might like BITS for its equity allocation. Conversely, investors desiring more accurate tracking of the Bitcoin spot price might like BITS for its futures allocation. The ETF costs an expense ratio of 0.65%.

#5. Purpose Bitcoin ETF (BTCC.U)

The U.S. ETF market usually leads the way in innovation, but for cryptocurrency ETFs the Canadian market has pulled ahead. Securities regulators in Canada have approved spot cryptocurrency ETFs since February 2021, with BTCC.U listing first on the Toronto Stock Exchange. U.S. investors who can access Canadian ETFs on their brokerage platform can buy BTCC.U without exchange currency, as the ".U" version is denominated in U.S. dollars. This is likely the only way U.S. investors can gain spot cryptocurrency exposure via an open-ended ETF for the time being. Currently, BTCC.U holds 0.00018565 Bitcoin per share and costs an expense ratio of 1.49%.