| Investment | Investment account | Purchase price | Selling price | Benefit | Capital gains tax | After-tax benefits |
|---|---|---|---|---|---|---|
| Bitcoin | Unregistered | $23,500 | $61,000 | $37,500 | $3,750 | $33,750 |
| Bitcoin ETF | A TFSA | $23,500 | $61,000 | $37,500 | $0 | $37,500 |
As you can see, in this hypothetical scenario, the bitcoin ETF's tax-free profits come out at $3,750, about 11% more than the after-tax profit on bitcoin.
Canadian crypto ETFs
The table below shows all the crypto spot ETFs based in Canada. You can buy bitcoin ETFs (ETFs that invest entirely in BTC), ethereum or ether ETFs (those that invest entirely in ETH) or many crypto ETFs (those that invest in -BTC and ETH). So far, BTC and ETH are the only currencies available through ETFs. (Statistics current as of Aug. 30, 2024.)
| An ETF | A ticker symbol | Management expense ratio (MER) | Assets under management (in Canadian dollars) |
|---|---|---|---|
| Bitcoin ETFs | |||
| Purpose Bitcoin ETF | BTCC / BTCC.B | 1.5% | $2.1 billion |
| CI Galaxy Bitcoin ETF | BTCX.B | 0.77% | $724.7 million |
| Fidelity Advantage Bitcoin ETF | FBTC | 0.69% | $491.6 million |
| 3iQ Coinshares Bitcoin ETF | BTCQ | 1.75% | $283 million |
| Evolve Bitcoin ETF | EBIT | 0.75% | $165.5 million |
| Ethereum (ether) ETFs | |||
| Purpose of the Ether ETF | ETHH / ETHH.B | 1.47%–1.49% | $318.7 million |
| CI Galaxy Ethereum ETF | ETHX.B | 0.77% | $385 million |
| Evolve Ether ETF | ETHR | 0.75% | $55.2 million |
| 3iQ Ether Staking ETF | ETHQ | 1.97% | $65.8 million |
| Fidelity Advantage Ether ETF | FETH | 0.95% | $18.7 million |
| Many cryptocurrency ETFs | |||
| Exchange shares Cryptocurrencies ETF | ETC | 0.85% | $35.4 million |
| CI Galaxy Multi-Crypto ETF | CMCX.B | 1.03% | $3.7 million |
US crypto ETFs: Should you invest?
US ETFs created a lot of talk in 2024. The Securities and Exchange Commission (SEC) approved the first in January, nearly three years after Purpose Investments launched Canada's first bitcoin ETF.
Many US ETF providers now offer bitcoin ETFs, including major investment products such as BlackRock Shares, Fidelity and Invesco. Canadian investors can buy these ETFs, too, through their trading account at a discount—just as they would any US stock or ETF. And, yes, these ETFs can be held in registered accounts like a TFSA or RRSP.
Which is better: Canadian or US ETF?
Truth be told, there isn't much difference between the two. For example, bitcoin ETFs in both countries hold the same underlying asset: bitcoin. Investors can make a decision based on their preferred parameters.
For example, you could choose a bitcoin ETF with the lowest management expense (MER) or the highest assets under management (AUM), or you could look for the oldest fund—regardless of where it's based.
When you go with a Canadian ETF, you have more choices: Do you want a Canadian ETF that hedges its currency risk or one that doesn't? Do you want to hold an ETF in US dollars? The table below lists options for one example, the Purpose Bitcoin ETF. (Statistics current as of Sept. 13, 2024.)
| ETF (ticker symbol) | Money | Currency hedge | One year return |
|---|---|---|---|
| BTCC | Canadian dollar | Yes | 117.94% |
| BTCC.B | Canadian dollar | No | 121.15% |
| BTCC.U | American dollar | No | 120.88% |
In the right column, you will notice that there is a difference in the one-year historical returns of the ETFs, even though they all hold bitcoin as their underlying asset. This difference is due to the appreciation or depreciation of the currency in which the ETF holds bitcoin. In this case, the unsecured ETF delivered higher returns because it benefited from the appreciation of the US dollar against the Canadian dollar. But there is no way to know this one year ago. Like all financial markets, the currency market is highly unpredictable.
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