Cryptocurrency ETFs

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What are Crypto ETFs?

Cryptocurrency Exchange Traded funds (ETFs), or Crypto ETFs, can be a convenient way to invest in Cryptocurrency through your regular brokerage account, without the hassle of direct crypto ownership or storage. A range of different ETFs tracking different cryptocurrencies such as Bitcoin, Ethereum ( also known as Ether), etc. are now available in Canada and the U.S. Like traditional ETFs, they're traded on stock exchanges, tracking the prices of cryptocurrencies, either individually or in a group.

Benefits of Crypto ETFs

  • Simple to trade

    Unlike cryptocurrencies that trade only on cryptocurrency exchange, Crypto ETFs can be traded with the same ease as buying and selling stocks.

  • TFSA and RRSP eligible

    Unlike direct cryptocurrency purchases, Crypto ETFs can be purchased in registered accounts.

  • Convenient

    Crypto ETFs remove the need for investors to manage their own crypto wallets or grappling with private and public keys.

Things to consider when investing in Crypto ETFs

Even with no direct ownership of cryptocurrency, Crypto ETFs are still subject to the volatility of the crypto markets. There is also a risk of tracking errors that come with owning ETFs as the ETF does not always replicate the exact return of the underlying asset.In addition, it may help to review the management expense ratio on Crypto ETFs as it could be higher compared to regular ETFs.

NOTE Find out more about Investing in Cryptocurrency Exchange-Traded Funds (ETFs) and What is Cryptocurrency

Types of Crypto ETFs

  • Crypto Spot ETFs – Gaining direct exposure

    These ETFs track the price of a specific cryptocurrency through holding the actual coin – they can be ideal for investors who are looking for an easy way to invest in crypto, without the complexities of owning and storing the currency.

  • Crypto Futures ETFs – Seeing into the future

    Futures ETFs do not directly hold cryptocurrency within its fund – cryptocurrency prices are tracked through futures contracts, based on the speculation on the future price of the currency.

Discover more about Crypto ETFs

Like other traditional ETFs, Crypto ETFs can be bought and sold in all accounts available at TD Direct Investing. 

You can buy and sell Canadian or U.S.-based Crypto ETFs with any TD Direct Investing account. If you don’t have an account, click here to open.
Learn more here.

Interest rose for Bitcoin Spot ETFs in January 2024 due to a decision that month from the SEC approving them to be traded. Additionally, interest in Ether Spot ETFs have now garnered similar interests with SEC approval for trading as of July 23, 2024. These decisions by the SEC have given firms the ability to launch Bitcoin and Ether Spot ETFs on major U.S. stock exchanges.

A blockchain ETF is a fund that invests exclusively in companies that have operations related to blockchain technology. However, they are different from crypto ETFs that invest in a pool of digital currencies such as Bitcoin. The key difference is in the instruments that they track, where Bitcoin is a cryptocurrency, and blockchain is the underlying database technology.

A 3x leveraged ETF aims to yield three times the return of the index or other benchmark that it tracks. So, a 3x leveraged Bitcoin ETF seeks to triple the Bitcoin's performance for that day. However, leveraged ETFs can be quite risky as you can also incur 3x loss if the index doesn't perform well.

  • Crypto ETFs may offer lower risk than holding crypto directly, as there is no need for wallet storage, you do not need to worry about losing your private key to access your wallet and thus, your crypto holdings.
  • Diversification- exposure to a variety of cryptocurrencies, with the potential to reduce the risk associated with investing in individual digital currencies.
  • With Crypto ETFs, all of your holdings can be consolidated into one account, unlike with cryptocurrencies, which need to be stored in a digital wallet.
  • Registered account eligible as you can buy crypto ETFs in your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP), in Canada.

With any investment there are risks, and crypto is no different. It can pose risks if a significant amount of your portfolio is invested in futures markets, or even if your ETF indirectly invests in crypto held by an investment firm. It’s important to thoroughly research all your potential investments, while considering your own personal risk profile along the way. Risks can include:

  • Administration fees associated with ETFs. It's important to note that crypto ETFs can have higher expense ratios than other ETFs.
  • Potential for lack of transparency or inaccurate reflection of actual crypto prices.
  • No actual ownership of crypto.

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