Crypto currencies are growing in popularity daily and, as a result, many people are wondering about crypto ETFs in Canada.
If you’re looking to invest in crypto but don’t want the hassle of a crypto wallet, a special app, and transferring money across accounts, you might consider investing in something like a Bitcoin ETF.
If Bitcoin isn’t your thing, there’s also a crypto ETF for investing in a variety of cryptocurrencies. With so many options for ETFs emerging, we can help you get a handle on what’s out there.
Overview of crypto ETFs
New to the investing scene and want a quick rundown? Here’s an overview of crypto ETFs in Canada.
What is an ETF?
An ETF – or exchange traded fund – is a type of investment that tracks a specific part of the stock market. For example, an S&P 500 ETF tracks a hypothetical portfolio of S&P 500 stocks – that is, from 500 of the top publicly traded companies.
ETFs can be purchased or sold on a stock exchange the same way a regular stock can.
Because an ETF can be structured to track anything from specific commodities to large collections of stocks, or even a specific investment strategy, it was only a matter of time before crypto ETFs came into existence.
What is a Crypto ETF?
Crypto ETFs are the same as regular ETFs, only they track the price of one or more cryptocurrencies. This includes cryptos like:
- Bitcoin,
- Etherium, and
- Litecoin, etc.
Since the value of cryptocurrencies tends to be volatile, you can expect similar volatility in a crypto ETF – but with the added benefit of being a bit more diversified if it tracks an assortment of crypto.
Best crypto ETFs in Canada
Crypto ETFs are still new and not widely available. They’re now traded in a variety of countries, but the first Bitcoin ETF was approved in Canada in February 2021.
Still, you have options. And, as usual, not every ETF is created equal.
| Winner | Best for | Inception date | Fees | Assets under management |
|---|---|---|---|---|
| CI Galaxy Bitcoin ETF (BTCX-B.TO) | Bitcoin & low fees | March 5, 2021 | 0.4% management fee (capped at 0.95%) | About $558K |
| Purpose Bitcoin ETF (BTCC-B.TO) | Bitcoin & high volume trading | February 18, 2021 | 1.49% MER (capped at 1.5%) | About $1.8 Billion |
| CI Galaxy Ethereum ETF (ETHX-B.TO) | Ethereum & low fees | April 16, 2021 | 0.4% management fee (capped at 0.95%) | About $1.2 Billion |
| Evolve Cryptocurrencies ETF (ETC.TO) | Mixed crypto investments | September 29, 2021 | 0% (0.75% from underlying investment funds) | About $25 Million |
Note: All stats recorded on October 27th, 2021. For the most up to date information, please see the related links.
1. Best low fee Bitcoin crypto ETF
- Name: CI Galaxy Bitcoin ETF
- Ticker: BTCX-B.TO
- Inception date: March 5, 2021
- Fees: 0.4% (MER will not exceed 0.95%)
- Currencies: Bitcoin
- Assets under management: About $558K
CI Galaxy Bitcoin ETF’s objective is to provide exposure to Bitcoin through an institutional-quality fund platform. It allows people to access Bitcoin investments without a crypto wallet or the other technical aspects of crypto investing.
It has the lowest fees of any Bitcoin ETF currently available and that’s important, because minimizing fees will keep more of your returns in your pocket.
It also has relatively high volume. Though it’s not the highest volume, trade turnover might be slightly lower than a comparable Bitcoin ETF. But that shouldn’t be an issue, particularly if you are holding these shares for long-term investment.
This is the Bitcoin ETF option with the lowest fees, and if you are going to HODL – hold on for dear life – for long-term investments, then this is likely the best option for you.
2. Best high-volume Bitcoin crypto ETF
- Name: Purpose Bitcoin ETF
- Ticker: BTCC-B.TO
- Inception date: February 18, 2021
- Fees: 1.49% MER (capped at 1.5%)
- Currencies: Bitcoin
- Assets under management: About $1.8 Billion
Purpose has a fantastic tag-line for their Bitcoin ETF: “Own a piece of history with the first physically settled Bitcoin ETF available to investors.”
Yes, Purpose is well known simply because it was the first ETF of its kind. So it makes sense that they would have the highest trading volume (number of people buying and selling on a daily basis).
If you want to trade in and out of the ETF, buying shares at lower prices (dips) and selling when the price rises (peaks), then this might be the one for you.
But there is one other thing you should know: Purpose has higher fees. At 1.49% MER, it’s higher than many standard ETFs on the market – and this is actually the highest fee for any crypto ETF as of the writing of this article.
It’s the first, it’s the most traded. But that doesn’t make it the best for all purposes.
3. Best Ethereum crypto ETF
- Name: CI Galaxy Ethereum ETF
- Ticker: ETHX-B.TO
- Inception date: April 16, 2021
- Fees: 0.4% (MER will not exceed 0.95%)
- Currencies: Ethereum
- Assets under management: About $1.2 Billion
CI Galaxy has created a low-fee ETF to give you access to Ethereum. In their words: “The ETF’s investment objective is to provide holders of units exposure to Ether through an institutional-quality fund platform.”
It’s for those who want exposure to Ether, want capital growth over the long term, and can tolerate high risk.
Like CI’s Bitcoin ETF, their Ethereum ETF has the lowest fees in its class. You’d invest here to keep money in your pocket and keep your investments for the long-term.
4. Best mixed-currency crypto ETF
- Name: Evolve Cryptocurrencies ETF
- Ticker: ETC.TO
- Inception date: September 29, 2021
- Fees: 0% (0.75% from underlying investment funds)
- Currencies: Bitcoin and Ethereum
- Assets under management: About $25 Million
There aren’t many mixed currency ETFs on the market, and for that reason, we recommend Canada’s first. Evolve’s mixed crypto ETF was the first to provide investors with exposure to Bitcoin and Ethereum in one spot, “on a market capitalization basis, through an ETF structure.”
It has a lower trading volume than most other crypto ETFs though, so be careful. It’s a good idea to have a stop limit in place, in case a stock price drops 5% or more in a day. The risk here is that with too little volume, you won’t be able to trade at all.
You don’t want to be the “bag holder” – someone who holds onto their investment until the value drops so far it becomes worthless. But if you’re holding for long-term investment, you likely won’t worry about this.
As of right now, Evolve looks like the best option for accessing Bitcoin and Ether in one ETF.
If you prefer to invest in high-volume ETFs, but want both Bitcoin and Ethereum, then you may want to buy two separate ETFs. Read above for options.
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When looking at crypto ETFs we measured some very important factors, including:
- fees,
- inception date,
- assets under management, and
- trading volume.
Let’s take a closer look at each of these factors.
Fees
The higher the fees, the more money the managing firm will take. To an outsider, the difference between 1% and 0.75%, or dropping from 0.75% to 0.4%, may not seem great.
But when this occurs over the course of a long-term investment, it can mean a difference of $100K to $300K or more in your return.
For that reason, we prioritized crypto ETFs with lower fees.
Inception date
This may be the least important metric we looked at, but it does matter.
Normally, people look to invest with a long-standing financial institution. They look for funds and investments that have paid off in the past, for financial institutions that are less likely to go belly-up.
They want a proven track record of success.
With crypto ETFs…it’s a bit different. They’re new, so there are no long-standing crypto ETFs available at all.
So why does the inception date matter? Because there’s still a buzz around being the first to market, that’s why. More people want to invest in the first Bitcoin ETF than with the 4th or 5th.
And new ETFs of this type usually have more assets under management.
Which brings us to the next important metric…
Assets under management (AUM)
We looked at each Bitcoin, Ethereum, and mixed-crypto ETF to see:
- how much money they were managing,
- what assets they had invested, and
- what their holdings were.
We wanted to focus on ETFs that manage larger amounts of money. This implies investor confidence, because people are willing to put their money – and large quantities of it – into these ETFs. And leave it there.
The larger the ETFs-managed assessment, the more comfortable we are making the investment.
But that isn’t the entire puzzle. For example, when we looked at our top 2 Bitcoin ETFs, one (Purpose) had a much larger AUM, but its fees were much higher.
CI Galaxy, on the other hand, had lower fees and a respectable AUM, even if not the highest.
Trading Volume
Trading volume is an interesting metric, since it can help investors pick out the trends in the market. If there’s an increase in trades, the price usually follows.
This metric also shows us how easy it will be to trade the shares at a later date. If the volume is low, there are lower numbers of trades occurring. Therefore, there are less opportunities for trade.
For this reason, we prioritized higher trading volumes.
How to buy a crypto ETF in Canada
Investors can acquire crypto ETFs in Canada in a variety of ways. They’re sold on the stock exchange and can be purchased through major financial institutions or through other online investing sites or apps (like Wealthsimple).
Buy on Wealthsimple Trade
If you are looking to start investing in ETFs, or if you are tired of paying commission fees, then Wealthsimple Trade is a convenient, inexpensive option.
Wealthsimple makes it easy to access crypto ETFs, along with other ETFs and stocks. It offers commission-free ETF and stock trading, making investing affordable for the average person.
Compare their rates (or lack thereof) to big banks like Scotiabank who charge upwards of $9.99 per trade, and the difference is obvious.
They also offer direct access to cryptocurrencies. Through Wealthsimple Crypto, you can buy:
- Bitcoin,
- Ethereum,
- Doge, and
- many other cryptocurrencies.
And all of these purchases are made commission-free. You’ll also save the fees charged by ETFs.
Learn more about Wealthsimple Trade here:
While you may have heard of Wealthsimple, did you know that Wealthsimple also offers Wealthsimple Self-Directed Investing? And it’s a little different. They advertise it as “a simpler way to trade,” and it’s hard to argue with that. You can only open a handful of account types. You can trade stocks, ETFs, options, margin, and corporate products on Canadian and U.S. exchanges. And that’s about it.
- Well designed and easy to use app
- Trade on Canadian and U.S. exchanges
- CIPF protection up to $1,000,000
- No minimum account balance
- Market + 1.5% fee for currency conversion
- There are some fees for particular things
- Focus on simplicity and ease of use
- Search and track stocks with a watchlist
- Personal
- TFSA
- RRSP
- LIRA
- FHSA
- RESP
- RRIF
- Non-registered
- Corporate
- Margin
- Stocks
- ETFs
- Options
- Crypto
- Margin
Buy with a “Big 5” bank
If you prefer to stick with a long-established bank you’ve known for years, the Big 5 banks (CIBC, BMO, RBC, Scotiabank, and TD) have their own online brokers. However, they do have higher fees, as mentioned above.
For a new investor or someone who wants to buy a small number of shares at a time, these fees can hurt. Buying, say, 3 Bitcoin ETF shares at $11 might be all you can afford one week. But if the transaction costs $9.99, you will need each of those shares to increase by more than $3.33 to break even.
At $6.95 per trade, CIBC’s Investor’s Edge has the cheapest fees for stock/ETF trading of all the big 5 banks. But this still means you are getting $33 of shares at a cost of $39.95.
You can learn more here:
This online investment brokerage is owned and run by CIBC, and is targeted towards people who are interested in managing their own investments, learning about how to manage their own investments, and people who do investment management for a living. With relatively low fees for trades, and discounts for students and active traders, this is a service worth looking into.
- Get 100 free online equity trades with code EDGE100
- No minimum investment required
- Lower than average fees per trade
- Discount on trade fees for students and young adults
- Discount on trade fees for active traders
- Seems to be designed for regular people, not just the ultra rich
- Per transaction fees can add up quickly
- Ages 18 - 24 trade for free
- Free investment research tools
- Extended trading hours
- TFSA
- RRSP
- RESP
- RRIF
- LRSP
- PRIF
- LIRA
- LRIF
- Cash
- Margin
- Corporate
- Partnership
- Formal trust
- Investment club
- Estate
- FHSA
- Stocks
- ETFs
- Options
- Mutual Funds
- GICs
- Fixed Income
- Precious Metals
- Structured Notes
- IPOs
- CDRs
Click here to learn more about investing in Canada.
Pros and cons of crypto ETFs
As with all investment options, there are pros and cons to trading ETFs. Every investment has its risks, though, so let’s look at what you’re getting into with crypto ETFs.
5 benefits of crypto ETFs
Cryptocurrency ETFs do one thing very well: they make crypto available to the average investor, without the added hassle of a crypto wallet, computing power, or the added insecurity of losing the key to your wallet.
- Tax efficiency: Purchasing an ETF through an RRSP or TFSA is tax-efficient and will protect your gains. Crypto ETFs make this possible for your crypto investments.
- Keeping your crypto: Crypto ETFs don’t require digital wallets, so there’s no worries about losing your security key, or the associated investment.
- Security: Crypto ETFs have less technical requirements, therefore significantly lessening the risk of being hacked.
- Experience the upside: You get access to the crypto market and the potential financial gains offered by the rising value of these digital coins.
- Ease of access: You don’t need to know how crypto works in order to invest.
4 downsides of crypto ETFs
Discussing what isn’t so great about crypto ETFs is also important before deciding to plunge into this market option.
- High risk: Cryptocurrencies experience high volatility. You can see your investment rise and fall as much as 50% in a matter of days, or even hours. Although this is less true with an ETF that’s partially tied to investors and the perceived value of the fund, it will still be subject to some of the volatility faced by the coins themselves.
- Management fees: The fees will eat into your profits, compared to buying crypto directly.
- Inaccuracy: With an ETF, you’re tracking the price of cryptocurrency. There may be a difference between the increase of the stock’s value and the actual value of the currency you’re trying to track. You might not see all the upside, but you might not see all the downside either.
- Trading limits: Your ability to trade a crypto ETF is limited to when the markets are open. The currencies themselves, though, are traded 24 hours a day.
What about you?
Crypto ETFs are a secure way to invest in cryptocurrencies, but they can be highly volatile, which incurs risk. They’re becoming more widely available as the market adjusts to the idea of selling crypto as a security on various stock exchanges.
Not all ETFs are created equal, so use the above information to navigate the fees, AUM, and trade volumes when choosing the right ETF for you.
Are you thinking about investing in crypto ETFs? Let us know in the comments below.
FAQ
What is a crypto ETF?
Crypto ETFs are funds traded on a stock exchange that attempt to track the price of a cryptocurrency, therefore giving you an easy entry point for investing.
Does Canada have a Bitcoin ETF?
Although the first Bitcoin ETF only began trading in the USA in mid-October, Canada has had a few on the market for a while. They are traded on the Toronto Stock Exchange and the 4 most popular are: BTCX, BTCC, EBIT, and BTCQ. You can learn more here.
How do I buy a crypto ETF in Canada?
You can buy a crypto ETF the same way you would any other ETF or stock. You can go through an investment broker, your bank’s investment software, or an online investment site/app like Wealthsimple Trade.
What’s the best crypto ETF in Canada?
The CI Galaxy Ethereum ETF (ETHX.B) is our top choice for the best crypto ETF in Canada. You can learn more here.
What’s the best Bitcoin ETF in Canada?
If you’re looking specifically for Bitcoin, CI Galaxy Bitcoin ETF (BTCX-B) is also our top choice for the best Bitcoin ETF in Canada. Click here for more info.
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