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Bitcoin EFTs in a SMSF

Summary

How ETFs Provide Safer Exposures to Bitcoin investing in an Australian SMSF

Bitcoin ETFs in an SMSF

The SEC’s recent announcement marks a pivotal moment in the integration of cryptocurrency into mainstream financial markets. By approving Bitcoin ETFs, the SEC is allowing investors to gain exposure to Bitcoin without the complexities and security concerns associated with buying and storing actual cryptocurrencies.

Available Crypto ETFs: Names, Fees, and Type of Bitcoin Exposure

ETF Name

Ticker

Fee

Type of Bitcoin Exposure

iShares Bitcoin ETF

IBIT

0.25% p.a. (0.12% for 12 months)

Primarily invests in Bitcoin futures contracts

VanEck Bitcoin Trust

HODL

0.25% p.a.

Direct exposure by investing in Bitcoin

Fidelity Wise Owl Bitcoin Trust ETF

FBTC

0.25% p.a. (0% for 12 months)

Holds Bitcoin directly, providing tangible exposure

 

How ETFs Provide Safer Exposure to Bitcoin

  1. Risk Mitigation:
  • Diversification: Some crypto ETFs hold a basket of different cryptocurrencies, reducing the risk compared to holding a single cryptocurrency.
  • Custody and Security: ETF providers are responsible for security and custody, mitigating the risk of theft or loss.
  • Regulatory Oversight: ETFs are regulated financial products, offering a layer of investor protection not present in the unregulated crypto market.
  1. Simplified Tax and Compliance:
  • Reporting Frameworks: ETFs fit into established tax and reporting frameworks, simplifying earnings or losses reporting.

 

 

 

 

Comparison of Bitcoin ETFs

Factor

iShares Bitcoin ETF (IBIT)

VanEck Bitcoin Trust (HODL)

Fidelity Wise Owl Bitcoin Trust ETF (FBTC)

Fee

0.25% (0.12% for 12 months)

0.25%

0.25% (0% for 12 months)

Exposure Type

Bitcoin Futures Contracts

Direct Bitcoin Investment

Holds Bitcoin Directly

Regulatory Status

Approved

Approved

Approved

Conclusion

The SEC’s move to approve Bitcoin ETFs is a significant step towards the mainstream adoption of cryptocurrencies. These ETFs offer a safer, more accessible way for a wider audience to gain exposure to Bitcoin, providing the benefits of cryptocurrency investments while mitigating many inherent risks. Ethereum ETFs appear to be next on the list.

Note: These articles represent the writers’ opinions. They are not to be construed as Investment Advice. Always DYOR – Do your own research and adopt a diversified approach to your SMSF investing.

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