Spot ETF
An exchange-listed product that holds the asset itself, so its share price tracks the asset's market price rather than futures contracts.
A spot product buys and holds the underlying asset with a custodian, and issues shares that trade on a stock exchange during exchange hours. Its price is kept close to the value of the holdings by large firms called authorized participants, who create and redeem blocks of shares whenever the share price drifts from the underlying value. This differs from a futures-based product, which holds dated contracts and must roll them forward, incurring costs that make the tracked return diverge from the spot price over time. In the United States, several spot bitcoin products began trading on national exchanges in January 2024; despite the common label, many digital-asset products are legally commodity-based trusts rather than funds registered under the Investment Company Act.
In practice
A spot product's holdings sit in wallets controlled by a named custodian, and the sponsor publishes the amount of the asset held per share, which declines slowly as the sponsor sells small amounts to pay the fee.
The common misunderstanding
That owning shares gives you the underlying coins, when the shares are a claim on a fund or trust and holders cannot move the coins on-chain or withdraw them to a personal wallet.