How to invest in a Bitcoin ETF through Charles Schwab?

Understanding Bitcoin ETF Availability at Charles Schwab

1. Charles Schwab began offering access to spot Bitcoin exchange-traded funds in early 2024 following SEC approval of several such products.

2. Eligible ETFs include the iShares Bitcoin Trust (IBIT), Bitwise Bitcoin ETF (BITB), and Fidelity Wise Origin Bitcoin Fund (FBTC).

3. These ETFs hold actual Bitcoin in custodial wallets, distinguishing them from futures-based alternatives previously available.

4. Schwab does not list all Bitcoin ETFs; only those meeting internal compliance, liquidity, and custody standards appear on its platform.

5. Investors must have a taxable brokerage account—retirement accounts like IRAs may face restrictions depending on fund-specific policies.

Account Setup and Eligibility Requirements

1. A fully funded and verified Schwab brokerage account is mandatory before placing any ETF order.

2. Account holders must complete a short suitability questionnaire covering investment objectives, risk tolerance, and cryptocurrency exposure history.

3. Schwab applies no minimum balance requirement specifically for Bitcoin ETF purchases, though standard account maintenance rules apply.

4. International clients are excluded; only U.S. residents with valid Social Security numbers or ITINs may trade these ETFs through Schwab.

5. Margin accounts allow ETF purchases but prohibit borrowing against Bitcoin ETF shares as collateral.

Placing an Order via Schwab’s Trading Interface

1. Log into the Schwab website or mobile app and navigate to the “Trade” section.

2. Enter the ETF ticker symbol—such as IBIT—and select “Stock/ETF” as the security type.

3. Choose order type: market orders execute immediately at prevailing prices; limit orders let users specify maximum buy price.

4. Input quantity and review commission details—Schwab charges $0 online equity and ETF trades, including Bitcoin ETFs.

5. Confirm and submit. Execution typically occurs within seconds during market hours; after-hours trading is unavailable for these ETFs.

Tax and Reporting Implications

1. Gains or losses from Bitcoin ETF sales are treated as capital gains under IRS guidelines, matching the holding period of the shares—not the underlying Bitcoin.

2. Schwab issues Form 1099-B annually, reporting proceeds and cost basis for each closed position.

3. Dividends are not distributed by spot Bitcoin ETFs, eliminating dividend reinvestment considerations.

4. Wash sale rules apply if shares are sold at a loss and repurchased within 30 days, disallowing the loss for tax purposes.

5. Cost basis methods default to FIFO unless investors manually elect specific identification before settlement.

Frequently Asked Questions

Q: Does Schwab offer direct Bitcoin ownership, or only ETFs?Charles Schwab does not support direct Bitcoin purchases, transfers, or custody. Only SEC-registered Bitcoin ETFs are available.

Q: Can I use Schwab’s Automated Investing service to allocate funds to Bitcoin ETFs?No. Bitcoin ETFs are excluded from Schwab’s automated portfolio models and robo-advisory offerings.

Q: Are there custody risks tied to Schwab-held Bitcoin ETF shares?Custody risk resides with the ETF’s designated custodian—such as Coinbase Custody or BNY Mellon—not Schwab. Schwab acts solely as the broker-dealer.

Q: What happens if a Bitcoin ETF is delisted from Schwab’s platform?Existing positions remain intact. Investors retain full ability to sell shares, though new purchases would be blocked until relisting or replacement occurs.