In recent years, the crypto asset ecosystem has undergone significant transformations. Spot crypto ETFs (exchange-traded funds), in particular, have risen to prominence in the global financial agenda, reshaping how governments and institutional investors perceive the sector. A similar interest and curiosity are evident in Turkey as well. In this article, we will begin by explaining what spot crypto ETFs are, explore their global rise, discuss regulatory expectations in Turkey, examine shifting government attitudes, and assess the influence of institutional investors on the market. We will also evaluate the opportunities and risks introduced by this new ETF era and provide future projections and strategic insights specific to Turkey.

What Is a Spot Crypto ETF?

A spot crypto ETF is essentially an exchange-traded fund that physically holds a specific cryptocurrency (e.g., Bitcoin) and directly tracks its market price. Investors can buy and sell shares of the ETF on a stock exchange, allowing them to gain exposure to the price movements of the underlying crypto asset without directly owning it. Like traditional ETFs, spot crypto ETFs are traded on regulated markets, providing investors with added security and transparency.

The most defining feature of spot crypto ETFs is that they hold the actual cryptocurrency as the underlying asset. For example, a Bitcoin spot ETF uses investor funds to purchase real Bitcoin, which is then stored securely in a custody account. The shares of the ETF reflect the market value of these Bitcoins. In this way, spot ETFs differ from futures-based crypto ETFs, which use futures contracts rather than holding the cryptocurrency directly. Futures ETFs come with added complexities and costs, such as roll costs during contract expiration periods. Since spot ETFs purchase the actual asset, their price closely mirrors the spot market and is not affected by the discrepancies that can arise in futures markets.

The concept of a spot crypto ETF was first realized in 2021. The world’s first spot Bitcoin ETF was approved in Canada in February 2021 and began trading on the Toronto Stock Exchange. Approved by the Ontario Securities Commission, the Purpose Bitcoin ETF holds physical Bitcoin, offering investors a simple and efficient way to gain exposure. This milestone marked a turning point in the integration of crypto assets into traditional financial markets through structured financial products.

Conceptually, spot crypto ETFs offer investors the opportunity to access the potential of cryptocurrencies via traditional exchange instruments. As a result, they have created a new gateway for individuals who want to invest in crypto but prefer not to use crypto exchanges or wallets directly. The ETF structure is particularly beneficial for large institutional investors, enabling them to gain crypto exposure in compliance with existing regulations. Both retail and institutional investors can buy and sell crypto ETFs through their brokerage accounts, just like buying stocks or gold ETFs. Ultimately, spot crypto ETFs serve as a “financial packaging” solution for accessing cryptocurrencies. While the underlying asset and technology remain crypto-native, the user experience and regulatory environment are aligned with those of traditional finance.

The Global Rise of Spot Crypto ETFs

The spot crypto ETF wave, which began in 2021 with Canada leading the charge, quickly spread to other countries. Following North America, financial hubs in South America (e.g., Brazil), Europe (e.g., Switzerland, Germany, Liechtenstein, Jersey, Guernsey), and Australia successively launched spot Bitcoin ETFs. For instance, Europe’s first Bitcoin ETF was listed on Euronext Amsterdam in August 2023 by Jacobi Asset Management, following long negotiations with regulators from different countries. Europe now offers the most diverse spot Bitcoin ETFs globally, with 13 such ETFs established across Jersey, Switzerland, and Liechtenstein. As of early 2024, the total size of these funds is around $3.67 billion.

Canada, having the first-mover advantage, led the market from 2021 to 2023. By the end of 2023, Canada had six spot Bitcoin ETFs with assets exceeding $3 billion. These ETFs saw portfolio growth exceeding 60% within the first year, reflecting strong investor appetite following the approval of spot ETFs. Similarly, Brazil made history by listing Latin America’s first Bitcoin ETF (QBTC11) on the B3 exchange. Asset managers like Hashdex followed suit, launching ETFs based on various crypto indices, including spot Ethereum and XRP ETFs.

In Australia, the first spot Bitcoin and Ethereum ETFs were listed on Cboe Australia in 2022. Although some were delisted due to low volume, the country still joined the list of jurisdictions with regulatory approval for crypto ETFs.

While these developments unfolded, the world’s largest economy—the United States—remained reluctant toward spot crypto ETFs for years. Since 2013, at least eight different proposals were submitted to the SEC for a Bitcoin ETF, but all were either rejected or suspended due to concerns over market manipulation and custody practices. However, the landscape began to shift in 2023 when major asset managers began submitting new applications in rapid succession.

Wall Street giants such as BlackRock, Fidelity, WisdomTree, Invesco, Valkyrie, Ark Invest, and Grayscale submitted official applications to the SEC in mid-2023. In August 2023, the U.S. Court of Appeals ruled that the SEC’s rejection of Grayscale’s application was unlawful. Amid mounting regulatory pressure and rising institutional demand, the SEC finally approved multiple spot Bitcoin ETFs in January 2024. SEC Chair Gary Gensler stated that given the evolving landscape and the court ruling, approving these ETFs was the most sustainable way forward.

The U.S. approval triggered a surge. By early 2024, over 10 spot Bitcoin ETFs were trading in the U.S., with major funds like BlackRock’s iShares Bitcoin Trust (IBIT) attracting billions in investment. As of February 2024, the global spot Bitcoin ETF market reached $41.7 billion in total value, with the U.S. accounting for a dominant 83% share. In other words, after years of delay, the U.S. suddenly became the global leader. According to CoinGecko, there are now 32 spot Bitcoin ETFs worldwide, collectively holding around 839,000 BTC—approximately 4% of the total Bitcoin supply. These figures clearly indicate that spot ETFs have evolved from a niche product to a core investment vehicle in the crypto market.

Source: Coingecko.com

The global rise of spot crypto ETFs has had a significant impact on crypto market liquidity and pricing. The year 2024 became historic as Bitcoin reached its all-time high, surpassing the $100,000 mark for the first time. Experts attribute much of this surge to institutional capital inflows and renewed investor interest following the ETF approvals.

Regulations and Expectations Regarding Spot Crypto ETFs in Turkey

Although Turkey is a country with a high level of interest in cryptocurrencies, it does not yet have any spot crypto ETFs. The main reason for this is the lack of a regulatory framework and legal infrastructure in the past. However, Turkey has recently taken significant steps toward establishing a comprehensive legal framework for crypto assets. On June 26, 2023, an amendment passed by the Turkish Grand National Assembly laid the foundation for the country’s first crypto-specific regulation. This law introduced definitions for “crypto assets” and “crypto asset service providers” and mandated that crypto trading platforms be licensed and supervised by the Capital Markets Board (CMB). Furthermore, the law allows capital market instruments to be issued on blockchain systems, meaning the CMB may permit the issuance of securities as crypto assets, which can be tracked via distributed ledger technology instead of a centralized registry. This indicates that Turkey may pursue innovative steps in tokenization and digital securities issuance in the future.

Currently, there is no spot crypto ETF listed on Borsa Istanbul. However, with the new legal framework, expectations are growing that Turkey may move toward this area. The CMB’s licensing and oversight mechanisms for crypto asset service providers have helped increase market confidence. In 2024, for the first time, the CMB published a list of approved crypto service providers, establishing clear standards for the sector. These developments are creating a safer environment for both retail and institutional investors and are positioning Turkey to become a regional hub for crypto finance.

While no official move has yet been made regarding spot crypto ETFs in Turkey, global trends—especially ETF approvals in the U.S. and Europe—are being closely followed. Thanks to the legal foundation laid by the recent legislation, it is now legally feasible for a Turkish asset management company or bank to issue a Bitcoin or Ethereum ETF with CMB approval. In this context, expectations around spot ETFs in Turkey focus on establishing regulatory clarity and preparing the necessary infrastructure. Once secondary regulations (regulations and communiqués) are issued, technical details—such as custody standards, valuation methodology, and fund oversight procedures—will become clearer. These steps are expected to pave the way for spot crypto ETFs in Turkish lira.

Such a development in Turkey is expected to offer several benefits: local investors will be able to invest in crypto through a regulated environment under CMB supervision. This could encourage users currently trading on unregulated or offshore platforms to migrate to safer alternatives. From an institutional standpoint, large capital holders such as pension funds, portfolio management companies, and family offices will gain access to crypto investment tools that are fully compliant with local regulations. This could enhance financial product diversity and depth in Turkish markets. From a governmental perspective, regulated crypto investments will be easier to monitor, tax, and integrate into the broader financial system.

Thus, it can be said that Turkish regulators are not opposed to spot ETFs; rather, they are cautiously optimistic. In fact, officials have indicated that the 2024 legal framework is a promising foundation and that upcoming secondary regulations aim to build a competitive environment aligned with global standards.

In summary, while Turkey does not yet offer any spot crypto ETFs, rapid regulatory developments and a positive stance from authorities suggest that these products may become a reality in the medium term. Given investor demand and the financial sector’s alignment with global trends, the emergence of the first spot crypto ETFs in Turkey would not come as a surprise when the right time and conditions arise.

The Shift in Government Attitudes Toward Crypto Assets

When cryptocurrencies first emerged, many governments viewed them with uncertainty—or even as a threat. Initially, some countries adopted a “wait and see” approach, choosing not to rush into regulation. Others attempted to apply existing financial laws and regulations to crypto assets, while a third group introduced entirely new, crypto-specific regulations. Over time, the widespread adoption of cryptocurrencies and the creation of a multi-billion-dollar market forced governments to take a definitive stance. Ignoring the issue was no longer an option, and most countries found themselves facing two clear paths: impose strict restrictions and ban crypto, or regulate it comprehensively and integrate it into the financial system.

We have witnessed extreme examples along this spectrum. China, after years of warnings, took the strictest approach by banning all crypto transactions and mining activities in 2021, citing financial stability and capital control concerns. In stark contrast, El Salvador, a small Central American nation, declared Bitcoin legal tender that same year. The government began holding Bitcoin as a reserve asset and built an infrastructure allowing citizens to use Bitcoin in daily transactions. These two examples represent the polar extremes of state attitudes toward cryptocurrencies.

Between these extremes, major economies and international organizations have pursued a more balanced and regulatory transition. The European Union took a pioneering step in 2023 by approving the Markets in Crypto-Assets (MiCA) regulation. MiCA introduced unified rules for issuing crypto assets, licensing service providers, protecting investors, and ensuring market stability across the EU. The United States, long criticized for lacking a clear regulatory framework, signaled a more constructive approach in 2024 by approving spot ETFs and advancing several crypto bills in Congress. Notably, the SEC’s approval of multiple spot ETFs in early 2024 marked a significant shift in the U.S. stance, suggesting a growing acceptance of crypto as an asset class.

Today, most countries are moving away from outright bans toward a more pragmatic, regulatory approach. While their regulatory strategies may differ, certain trends are consistent: countries have started by defining and classifying crypto assets, then introduced licensing requirements for service providers (exchanges, custodians, etc.). Anti-money laundering (AML) and counter-terrorism financing (CFT) rules have also taken priority. For instance, Japan implemented crypto exchange registration and customer asset protection laws as early as 2017. Financial hubs like Singapore and Switzerland attract crypto firms through licensing regimes while enforcing strict compliance oversight. The United Kingdom, between 2023 and 2024, issued a range of regulations covering everything from crypto advertising to digital asset taxation, laying the groundwork for a comprehensive crypto regime.

An important aspect of this transformation is increased international cooperation. The borderless nature of crypto markets has encouraged nations to develop common standards. Global institutions such as the World Economic Forum (WEF), the Financial Stability Board (FSB), the International Monetary Fund (IMF), the World Bank, the OECD, and the International Organization of Securities Commissions (IOSCO) have actively monitored crypto regulations and published guidance. For example, the Financial Action Task Force (FATF) introduced the “Travel Rule” for crypto asset service providers, setting global AML standards. As a result, coordination and information sharing between national regulators have improved significantly.

Ultimately, government perspectives on crypto assets have evolved and matured substantially over the past five to six years. Whereas attitudes once leaned toward denial or prohibition, we are now in an era of “controlled acceptance.” Many countries now see crypto as a driver of financial innovation and economic growth, while also striving to protect investors and prevent abuse through a strong legal framework. Turkey has aligned with this global trend: after placing restrictions on crypto payments in 2021, it shifted toward regulation by enacting a comprehensive crypto law in 2023. This shift in government attitudes reflects the growing recognition that crypto assets are a permanent part of the global economic landscape.

The Role of Institutional Investors and Their Impact on the Market

In the early years of the cryptocurrency market, retail investors were the dominant force, while institutional investors—banks, funds, and corporations—remained cautious or took only small experimental positions. However, this dynamic has shifted dramatically in recent years. With the introduction of spot crypto ETFs, institutional capital has begun to flood into the crypto markets. The inclusion of Bitcoin on the balance sheets of companies like Tesla and MicroStrategy in 2021 signaled the early stages of institutional interest. By 2024, major asset managers such as BlackRock, Fidelity, Invesco, and Franklin Templeton were directly launching crypto investment products, playing a pivotal role in the institutionalization of the crypto space.

Data supports this trend. As of Q4 2024, institutional investors held $27.4 billion in U.S.-based Bitcoin ETFs—a staggering 114% increase from the previous quarter, reflecting the rapid pace of institutional adoption. By the end of 2024, total Bitcoin ETF assets in the U.S. surpassed $104 billion, with roughly 26% held by professional investors managing portfolios over $100 million. Notably, hedge funds and asset managers have heavily integrated Bitcoin ETFs into their portfolios, with hedge funds alone accounting for 41% of U.S. Bitcoin ETF institutional holdings by year-end. These figures highlight how quickly major players are becoming embedded in the crypto ETF space.

Source: Coinshares.com

The entry of institutional investors into crypto has significantly impacted market dynamics. Large capital groups that had previously remained on the sidelines—such as pension funds, insurance companies, and family offices—gained access to crypto through regulated instruments like ETFs. For example, BlackRock’s spot Bitcoin ETF, launched in January 2024, attracted hundreds of millions of dollars within days, breaking records. Within just a few months, spot ETFs collectively acquired hundreds of thousands of Bitcoins globally, creating substantial upward pressure on prices. On-chain data confirms that after ETF approval announcements, there was a surge in Bitcoin transfers exceeding $1 million, peaking around March 2024—coinciding with Bitcoin reaching new all-time highs.

Some analysts suggest that growing institutional demand has reduced crypto market volatility, as deeper liquidity and broader participation stabilize trading. Others caution that large ETF trades may introduce price swings, especially given past experiences with commodity-based ETFs (e.g., oil). In fact, Bitcoin’s mid-2024 price rallies and corrections were partly attributed to significant inflows and outflows from ETFs. Nonetheless, over the long term, institutional involvement is expected to bring greater stability and credibility to crypto markets, as these participants adhere to high compliance standards and elevate industry norms.

The influence of institutional investors extends beyond capital inflow—they also lend legitimacy to the asset class. The participation of top global asset managers and banks has shifted perceptions, positioning crypto not merely as an alternative investment but as a mainstream asset class. For instance, 14 major financial institutions—including BlackRock, Fidelity, and WisdomTree—submitted spot Bitcoin ETF applications in 2023, signaling a turning point in institutional acceptance. With approvals granted in 2024, interest surged further. Now, massive pension funds, university endowments, and even sovereign wealth funds are entering the market, often indirectly via crypto ETFs. Some national pension funds have begun allocating small shares to crypto ETFs listed in Canada and Europe. In the U.S., it is expected that major banks will increasingly compete to offer Bitcoin ETF access to their clients by 2025.

In summary, institutional investors have become key players in the maturation of cryptocurrency markets. Spot crypto ETFs have served as a catalyst in this transition, creating a bridge between traditional finance and the crypto ecosystem. The growing role of institutional capital has not only expanded the size and depth of the market but also prompted increased regulatory oversight, making it a critical factor in ensuring the ecosystem’s long-term sustainability.

The New Era of Crypto ETFs: Opportunities and Risks

The widespread adoption of spot crypto ETFs has ushered in a new era in the cryptocurrency markets. While this development brings numerous opportunities, it also presents notable risks that cannot be overlooked. For investors, regulators, and market participants alike, a thorough understanding of both the advantages and potential downsides is essential.

Opportunities of Crypto ETFs

Ease of Access and Mass Adoption:

Spot crypto ETFs simplify access to cryptocurrencies for a broad range of investors, removing the need for complex wallet setups or opening accounts on foreign exchanges. With a traditional brokerage account, investors can now trade Bitcoin ETFs just like they would gold ETFs or stocks. This offers a familiar entry point for those with high financial literacy but limited technical expertise.

Regulatory Oversight and Investor Protection:

ETFs are financial instruments launched with regulatory approval and ongoing oversight. Their presence in the market enhances transparency and compliance. Custodianship, auditing, and regular reporting requirements all contribute to safeguarding investor interests. For example, U.S.-approved Bitcoin ETFs are listed on national stock exchanges and are subject to anti-fraud and anti-manipulation rules, offering a security layer that is often absent in direct crypto investments.

Attracting Institutional and Retail Capital:

The ETF structure enables institutional investors—such as pension funds or insurance companies—to gain exposure to crypto assets while complying with their internal policies. Retail investors can also include crypto ETFs in portfolios via mutual funds or private pension schemes. This opens the door for broader capital inflows into the crypto ecosystem.

Improved Liquidity and Market Depth:

As demand for Bitcoin and other cryptocurrencies increases through ETFs, liquidity in the market improves. ETFs contribute to price discovery and efficient trading, while arbitrage mechanisms between ETF prices and spot prices ensure market coherence. Over time, this added depth could reduce volatility and stabilize market dynamics.

Innovation in Products and Services:

The success of spot ETFs has catalyzed financial innovation, leading to Ethereum-based ETFs, multi-asset crypto baskets, thematic ETFs (e.g., DeFi, metaverse tokens), and even inverse (short) crypto ETFs. These products enrich the financial ecosystem and offer investors diverse tools and strategies.

Risks of Crypto ETFs

Volatility Risk:

Crypto assets are inherently volatile. Spot ETFs do not eliminate this risk—they merely repackage it. Investors are still exposed to sharp daily price swings, and in periods of intense news flow, ETF prices may deviate even more rapidly than spot markets. Investors must be prepared for such volatility.

Management Fees and Tracking Error:

ETFs come with operational costs (e.g., annual expense ratios), which may slightly erode returns. During turbulent market conditions, ETF prices can diverge from their Net Asset Value (NAV), especially in less liquid or niche ETFs, leading to tracking errors.

Regulatory Risk:

Crypto regulation is still evolving globally. Changes in national policy could impact ETFs—through restrictions, tax burdens, or custodial requirements. In times of market stress, regulators may impose trading halts. Additionally, regulatory inconsistency across countries can complicate ETF management.

Custody and Security Risk:

The success of spot ETFs hinges on secure storage of the underlying assets. Most issuers use reputable custodians like Coinbase Custody or BitGo, employing cold storage and layered security. Still, no system is entirely immune to breaches, and any incident could damage trust and market value, regardless of remedial actions.

Centralization and Concentration Risk:

While cryptocurrencies are built on decentralization, large ETFs can lead to significant asset concentration in the hands of a few financial institutions. Currently, ETFs hold nearly 4% of all circulating Bitcoin. If this rises, governance mechanisms (e.g., in hard forks) could become centralized. Dominance by a few ETF issuers also raises concerns about monopolization.

Market Manipulation and Arbitrage Risks:

Even though ETFs operate on regulated exchanges, their underlying assets are traded in global crypto markets with varied regulatory standards. This opens opportunities for strategic front-running or manipulation, especially by entities using derivatives. While U.S. ETFs are backed by oversight via CME futures, global coordination is lacking, and altcoin ETFs are particularly vulnerable.

Investor Misunderstanding:

There is a risk that some investors may wrongly perceive ETFs as low-risk or guaranteed products. Since crypto ETFs are still based on highly volatile assets, they can experience drastic losses. Without adequate education, misinformed investors may face unexpected losses, leading to social or political consequences. Financial literacy and clear communication are crucial.

Crypto ETFs bring valuable opportunities to the table—expanded participation, increased liquidity, and greater legitimacy. However, these benefits come with inherent risks. Transparent communication, strong oversight, and investor education are critical to ensure balanced growth. Experts emphasize that the integration of Bitcoin ETFs into traditional finance and the crypto ecosystem marks a turning point, and with careful regulation and conscious participation, the sector can flourish sustainably.

Future Outlook

The rapid rise of spot crypto ETFs marks the beginning of a transformative phase in global finance. Expectations for the future are high, as analysts predict exponential growth in both the number and variety of crypto ETFs. The success of Bitcoin ETFs has already paved the way for Ethereum-based products, with U.S.-listed spot Ethereum ETFs gaining significant investor interest in 2024. This momentum is likely to expand further, leading to the introduction of diversified crypto baskets, sector index ETFs, and multi-asset digital funds. There are even early discussions around ETF-like structures for stablecoins and central bank digital currencies (CBDCs).

The geographical spread of crypto ETFs is expected to accelerate. Currently, no Asian country has approved a spot Bitcoin ETF, but Hong Kong regulators announced in 2024 that they are open to applications. It’s likely that financial hubs such as Singapore, Japan, and South Korea will follow suit when the time is right. In the Middle East, emerging crypto centers like Dubai and Abu Dhabi may also leverage ETFs to attract global capital. Over the next 2–3 years, the number of countries authorizing spot crypto ETFs is projected to increase significantly, driving global competition, innovation, and greater public access to crypto investments.

Turkey has an opportunity to strategically position itself by learning from existing ETF markets in Canada, Europe, and the U.S. These models offer valuable insights on best practices for custody, regulation, and market oversight. Turkish financial institutions could collaborate with foreign ETF issuers to gain technical knowledge and regulatory experience. For instance, a Turkish asset manager might partner with an international firm to launch a co-branded Bitcoin ETF—strengthening credibility and attracting investor trust.

Another crucial factor is the proactive involvement of the central bank and financial authorities. While crypto ETFs may not directly impact monetary policy tools, they could affect financial stability by making crypto holdings more accessible to the general public. The Central Bank should closely monitor ETF developments and assess interactions with the banking system—for example, if banks begin accepting ETF shares as collateral or incorporating them into lending practices. Establishing early guidelines could help mitigate future risks and align regulatory expectations.

Turkey’s recent crypto regulatory reforms, passed in 2024, have laid the groundwork for further innovation. If followed by the introduction of products like spot crypto ETFs, Turkey could emerge as a regional financial leader. The Istanbul Financial Center may evolve into a crypto and fintech hub, attracting foreign investors seeking access to regulated markets for crypto derivatives and ETFs. This, in turn, could lead to increased capital inflows and stimulate innovation among local fintech startups.

By integrating crypto ETFs into its financial architecture, Turkey could achieve multiple strategic goals: strengthening investor protection, enhancing market transparency, and driving competitive growth in its broader financial sector. Moreover, offering lira-denominated spot crypto ETFs would give Turkish investors regulated exposure to digital assets—potentially shifting volumes away from unregistered foreign exchanges to domestic platforms.

Spot crypto ETFs represent a critical bridge between traditional finance and the digital asset world. Their future holds immense promise, not only globally but also for Turkey’s financial ambitions. To realize these opportunities, Turkey must strike a delicate balance—moving swiftly on innovation while safeguarding financial integrity. With timely regulatory and strategic action, Turkey could secure a prominent role in shaping the future of global finance.