Not all Bitcoin ETFs are actually backed up by BTC held in wallets, known as Bitcoin Physical ETFs. Many Bitcoin ETFs, like the BITO, use BTC futures contracts as their underlying asset. 

The SEC has so far favored futures ETFs tied to the Chicago Mercantile Exchange’s (CME) Bitcoin futures, an already regulated financial security. A Bitcoin futures ETF uses the price of the CME’s Bitcoin Reference Rate (BRR), rather than the spot price. This means the only difference between a Bitcoin Physical ETF and a Bitcoin futures ETF is where their prices come from.