Crypto Hedge Funds Suffer Heavy Losses as Investors Flee to Exchange-Traded Products

Banks' Spot Crypto Holdings Continue to Collapse as Firms Move to ETNs

March 26, 2025 - The amount of spot crypto holdings held by banks has continued to decline in recent months, according to data released today. This trend is attributed to the increasing popularity of exchange-traded notes (ETNs) among financial institutions.

Spot crypto holdings, which are held in the form of actual cryptocurrencies, have been steadily decreasing since the start of the year. As of the latest figures, banks are holding a mere 10% of the spot crypto holdings they held in January.

In contrast, ETNs have seen a significant surge in popularity. These financial instruments allow investors to gain exposure to the cryptocurrency market without having to hold actual coins or tokens. As a result, many banks are opting for ETNs as a way to diversify their portfolios and minimize risk.

Industry experts attribute the shift towards ETNs to the increasing regulatory scrutiny surrounding spot crypto holdings. "Banks are getting nervous about the regulatory environment surrounding spot crypto, and ETNs offer a way to get exposure to the market without taking on the same level of risk," said a financial analyst.

The decline in spot crypto holdings is not limited to banks. Other financial institutions, such as asset managers and wealth management firms, are also reducing their spot crypto holdings in favor of ETNs.

The trend towards ETNs is expected to continue in the coming months, as the regulatory environment surrounding spot crypto continues to evolve. As the popularity of ETNs grows, it is likely that we will see a further decline in spot crypto holdings held by financial institutions.