If a crypto ETN (Exchange Traded Note) is physically backed, it means the ETN is supported by an actual holding of the underlying cryptocurrency, such as Bitcoin or Ethereum, held in custody by a regulated custodian. This physical backing signifies that the ETN issuer holds real crypto assets in reserve, often stored securely in cold storage (offline) to protect against theft or loss, providing tangible collateral for the ETN shares that investors hold. The value of the ETN shares reflects a real claim to these held cryptocurrencies, which contrasts with synthetic ETFs or ETNs that use derivatives to mimic the price movements without holding the actual coins.