The SEC have previously approved futures/derivatives ETFs. However this is NOT the same as a spot ETF.

With all the excitement around an ETF, I want to take a moment to explain the situation of where we are, what happened before and why a spot ETF is different from a futures/derivatives ETF.

The major difference is that a derivatives ETF allows trades to speculate/trade on say BTC Futures contracts while the spot ETF allows trading based on actual Bitcoin. That may not mean a whole lot of to a bunch of you so I'll breakdown further.

A Futures contract is a contract that allows a trader to bet on what the price of Bitcoin will be in the future. If the price of BTC increases, you can later sell the contract for a profit, similar to regular stocks. However, you do not hold any Bitcoin if you hold a Futures contract. Consequently, you cannot withdraw, deposit, use on the blockchain etc.

To add a bit more complication, there are some delivery Bitcoin futures contracts that expire at some particular date, after which you will receive the Bitcoin worth of the contract. Simply consider that you buy a contract for bricks from your local hardware today for delivery of the bricks on Friday. This is exactly how delivery contracts work. You purchase a contract(a promise) for an asset (Bitcoin) to be delivered to you in the future. But for the the vast majority of contracts the profits/losses are exchanged in cash and not "physical" Bitcoin and do not expire at all. These are "Perpetual" contracts where you can buy contracts for Bitcoin and sell them whenever you want in the future instead of on a particular date. If you sell it on a date when the price of Bitcoin is higher than the day you bought the contract, you make a profit received in fiat(USD). If you sell when Bitcoin's price is lower than the day you bought it you make a loss. Very similar to stocks.

So a Futures ETF allows traders to effectively buy and sell Bitcoin contracts. But not physical Bitcoin. But you may ask: won't both Bitcoin futures and actual Bitcoin buying pump the price of Bitcoin? Well, no. It's actually very different.

The price of Bitcoin drives the price of Bitcoin futures contracts, but not the other way around.

Consider it like this: Remember the contract you bought to receive bricks from your local hardware. What would happen if you sold that contract to someone else for a profit(or loss), and that someone else sold it to some else. The price of the bricks' contract may change, but the price of the contract for bricks does not affect the price of the bricks themselves. If someone else bought bricks from the hardware, they'd pay the same initial price you paid for the physical bricks, even if you sold your contract for a profit. The supply or demand on the bricks themselves did not change even if the supply or demand on the bricks' contract did hence no price change.

I hope that makes sense. It's kind of like how the experience of being scared of being punished by your parents for bad behaviour often turned out worse than the actual punishment.

And in actuality, Bitcoin futures use something called mark prices, index price and funding rates to keep the price of the contracts in line with the price of actual Bitcoin.

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Basically, the price of Bitcoin across a number of major exchanges is tracked and this price is used to determine the funding rate. If the price of Bitcoin futures is above the price of actual Bitcoin, the futures buyers pay the sellers a fee, thus incentivising the market to lower to futures price back in line with Bitcoin. If the price of Bitcoin futures is below the price of actual Bitcoin, the futures sellers pay the buyers a fee, thus incentivising the market to raise to futures price back in line with Bitcoin. Thus as before, spot/physical Bitcoin price affect the futures prices but not the other way around.

This is a major part of the reason why a spot ETF is different. A spot ETF would directly drive Bitcoin prices higher. All the previous buying in futures ETFs would not have had this direct effect and definitely not to the same degree.

TLDR: Unlike Futures, Spot ETF make Bitcoin price go BRRR!!!