Benzinga
Bitcoin ETFs vs Spot BTC
Bitcoin is now the largest and most well-known cryptocurrency. This cryptocurrency has a market cap of several hundred billion dollars and as a result, has massive potential for investors. However, investing in Bitcoin is slightly different than your average investment since cryptocurrencies can’t be traded on a stock exchange. Instead, bitcoin must be bought on a cryptocurrency exchange unless it is purchased through an ETF. These investment vehicles have unique pros and cons that might make them an attractive option for one investor but not another. So, what do each of these investments look like in practice? What is a Bitcoin ETF? A bitcoin ETF is an investment vehicle that tracks the performance of the leading cryptocurrency. The ETF can be purchased or sold on a stock exchange without ever owning the underlying asset. As a result, in the 1990s the concept of an ETF took off as traders quickly saw the benefits of low fees and ease of use. Today, many new investors begin investing with an ETF since it is easy to gain the advantages of diversification with limited knowledge of the market. However, when it comes to Bitcoin ETFs there are only recently options available to Canadian investors. So, before putting all your pool into an ETF, there are a couple of pros and cons to this investment vehicle that should be considered. Bitcoin ETF Pro: Remove New Learnings One of the main advantages of investing in Bitcoin ETFs is that it removes the technical issues that may require some learnings on the part of the investor. Purchasing an ETF avoids considerations such as the storage of coins, registration of wallets, compliance with safety rules and risks associated with underdeveloped cryptocurrency regulations. Instead, all the risks associated with purchasing Bitcoin are taken on by the founder of the ETF. Additionally, investing in a Bitcoin ETF encourages the adoption of cryptocurrencies as a full-scale investment method. Bitcoin ETF Pro: Can Be Purchased in a Registered Account Currently, you cannot hold Bitcoin or any other digital asset in a Tax-Free Savings Account (TFSA) or any other registered account, for that matter. Unfortunately, this is problematic since cryptocurrencies are considered investments to the Canada Revenue Agency, meaning they are subject to capital gains tax. For those who are unfamiliar, this tax is 50% of the profit earned. This taxable amount can be a huge deterrent. Especially since Canadian citizens must keep a detailed record of all the bitcoin transactions that they conduct throughout the year. For those who day trade or swing trade on a regular basis this can be incredibly time-consuming. However, blockchain or BTC ETFs might just be the way around it. Investors can trade Harvest Portfolio’s Blockchain Technologies ETF and similar offerings within a registered account. Many industry analysts also suggest a bitcoin ETF should qualify in your TFSA but verification with an accountant…
Read more:Bitcoin Miner Argo Blockchain Starts Trading on the US OTCQX Best Market
