Frequently Asked Questions

The 'best' Bitcoin ETF depends on your priorities. For lowest fees, Fidelity Advantage Bitcoin ETF (FBTC) at 0.39% MER or CI Galaxy Bitcoin ETF (BTCX-B) at 0.40% are top choices. For the most established option, Purpose Bitcoin ETF (BTCC) was the world's first spot Bitcoin ETF. All major Canadian Bitcoin ETFs hold actual Bitcoin and are eligible for TFSAs and RRSPs.

Yes! All Canadian-listed Bitcoin and crypto ETFs on the TSX are eligible for TFSAs. This means any gains you make are completely tax-free—you won't pay capital gains tax when you sell. This is one of the major advantages of crypto ETFs over holding Bitcoin directly, which cannot be held in registered accounts.

Yes, all Canadian-listed crypto ETFs qualify as eligible investments for RRSPs. You'll get a tax deduction on your contributions, and your investment grows tax-deferred until withdrawal. However, for most investors, maxing out your TFSA first makes sense since those gains are completely tax-free rather than just tax-deferred.

A spot Bitcoin ETF holds actual Bitcoin in secure custody—when you buy shares, the fund owns real Bitcoin. A futures ETF holds futures contracts that bet on Bitcoin's future price. Spot ETFs generally track Bitcoin's price more accurately and avoid 'roll costs' that can cause futures ETFs to underperform by 10-15% annually. For long-term investors, spot ETFs are typically the better choice.

Bitcoin ETFs are regulated investment products offered by established financial institutions, which provides protections not available on cryptocurrency exchanges. However, they still carry the volatility risk of Bitcoin itself—prices can swing dramatically. The underlying Bitcoin is held by qualified custodians like Coinbase Custody, Gemini, or Fidelity Digital Assets. Always invest only what you can afford to lose.

Bitcoin ETFs charge an annual Management Expense Ratio (MER) that ranges from 0.20% to 1.50% depending on the fund. In Canada, the lowest-fee options include FBTC (0.39%) and BTCX-B (0.40%). In the US, Bitwise BITB (0.20%) and Grayscale Mini (0.15%) offer the lowest fees. These fees are automatically deducted from the fund's assets—you don't pay them directly.

Open a brokerage account with a platform like Questrade, Wealthsimple Trade, or your bank's direct investing service. Search for the ETF ticker (e.g., 'FBTC' or 'BTCC-B'), decide how many shares to buy, and place your order. You can hold the ETF in a regular taxable account, TFSA, or RRSP. Most brokerages charge low or no commissions for ETF trades.

Both offer spot Bitcoin exposure, but there are key differences. Canadian ETFs have been available since February 2021, while US spot ETFs launched in January 2024. For Canadian investors, holding Canadian ETFs in registered accounts (TFSA/RRSP) is simpler—no currency conversion or US withholding tax concerns. US ETFs tend to have lower fees but require USD conversion.

Bitcoin doesn't generate income like stocks or bonds, so Bitcoin ETFs typically don't pay regular dividends. However, some funds may make annual distributions to pass through capital gains for tax purposes. Some specialty products like Purpose Bitcoin Yield ETF (BTCY) use covered call strategies to generate income, but these limit your upside potential.

Each ETF has a different 'Bitcoin per share' ratio, and it changes over time as the fund pays expenses. For example, one share of an ETF might represent roughly 0.001 BTC, but the exact amount varies. The important thing is that the share price tracks Bitcoin's price proportionally—if Bitcoin goes up 10%, your ETF shares should go up approximately 10% (minus fees).

No, retail investors cannot redeem ETF shares for actual Bitcoin. Only 'authorized participants' (large institutional traders) can create and redeem shares directly with the fund. As a regular investor, you would sell your ETF shares on the exchange for cash, then use that cash to buy Bitcoin on a cryptocurrency exchange if you want to hold it directly.

The underlying Bitcoin is held separately by a qualified custodian, not by the ETF issuer directly. If an issuer went bankrupt, the Bitcoin would still be held in custody for fund shareholders. A new manager would likely be appointed, or the fund would be liquidated with proceeds distributed to shareholders. This segregation of assets is a key investor protection.