| Investment | Investment account | Purchase price | Sale price | Gain | Capital gains tax | After-tax gains |
|---|---|---|---|---|---|---|
| Bitcoin | Non-registered | $23,500 | $61,000 | $37,500 | $3,750 | $33,750 |
| Bitcoin ETF | TFSA | $23,500 | $61,000 | $37,500 | $0 | $37,500 |
As you can see, in this hypothetical situation, gains for the tax-free bitcoin ETF come out ahead by $3,750, which is about 11% more than the after-tax gain on bitcoin.
Canadian crypto ETFs
The table below lists 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 multi-crypto ETFs (those that invest in BTC and ETH). As of now, BTC and ETH are the only cryptocurrencies available through ETFs. (Figures are current as of Aug. 30, 2024.)
| ETF | 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 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 |
| Multiple cryptocurrency ETFs | |||
| Evolve Cryptocurrencies ETF | ETC | 0.85% | $35.4 million |
| CI Galaxy Multi-Crypto ETF | CMCX.B | 1.03% | $3.7 million |
U.S. crypto ETFs: Should you invest?
U.S.-based bitcoin ETFs have created quite a buzz in 2024. The Securities and Exchange Commission (SEC) approved the first one in January, almost three years after Purpose Investments launched Canada’s first spot bitcoin ETF.
Numerous American ETF providers now offer bitcoin ETFs, including big investment brands like BlackRock’s iShares, Fidelity and Invesco. Canadian investors can buy these ETFs, too, through their discount brokerage account—just like they would any U.S. stock or ETF. And, yes, these ETFs can be held in registered accounts like the TFSA or RRSP.
Which is better: Canadian or U.S. ETFs?
Truth be told, there’s not much difference between the two. For instance, bitcoin ETFs in both countries hold the same underlying asset: bitcoin. Investors could make a decision based on their preferred parameters.
For example, you may pick the bitcoin ETF with the lowest management expense ratio (MER) or the highest assets under management (AUM), or you could look for the oldest fund—regardless of where it’s based.
If you go with a Canadian ETF, you could have more choices to make: Do you want a Canadian ETF that hedges its currency risk or one that doesn’t? Do you want to hold the ETF in U.S. dollars? The table below lays out the options for one example, the Purpose Bitcoin ETF. (Figures are current as of Sept. 13, 2024.)
| ETF (ticker symbol) | Currency | Currency hedge | One-year return |
|---|---|---|---|
| BTCC | Canadian dollar | Yes | 117.94% |
| BTCC.B | Canadian dollar | No | 121.15% |
| BTCC.U | U.S. dollar | No | 120.88% |
In the right-hand column, you’ll notice there’s a difference in the ETFs’ one-year historical return, even though they all hold bitcoin as their underlying asset. This difference is because of the appreciation or depreciation of the currency in which the ETF holds its bitcoin. In this case, the non-hedged ETF delivered higher returns because it benefited from the appreciation of the U.S. dollar against the Canadian dollar. But there’s no way to have known this one year ago. Like all financial markets, the currency market is largely unpredictable.
