Can You Buy Cryptocurrency on eTrade?

What Does eTrade Offer for Crypto?

The main way to get exposure to crypto on eTrade is through crypto focused stocks, such as mining companies, and through ETFs, which are available for both Bitcoin and Ethereum. Below is a list of some of the crypto investment options available through eTrade:

• Grayscale Bitcoin Trust (GBTC)
• Riot Blockchain, Inc. (RIOT)
• Overstock.com, Inc. (OSTK)
• MicroStrategy Incorporated (MSTR)
• Osprey Bitcoin Trust (OBTC)
• Marathon Digital Holdings, Inc. (MARA)
• Paypal Holdings, Inc. (PYPL)
• Grascale Ethereum Trust (ETHE)
• Coinbase Global, Inc. (COIN)
• Grayscale Horizen Trust (HZEN)
• Amplify Transformational Data Sharing ETF (BLOK)
• ProShares Trust – ProShares Bitcoin Strategy ETF (BITO)
• Grayscale Ethereum Classic Trust (ETCG)

What is an ETF?

An ETF, or exchange traded fund is a type of security that tracks an index, sector, commodity, or other asset. They can be purchased or sold on a stock exchange the same way a regular stock is. ETFs are available for all types of assets and are tools that can help the average person invest in a complex position that they would not normally. Crypto ETFs were launched in late 2021 to much excitement. They allow investors to gain exposure to the crypto sector without having to buy the assets directly.

When investing in an ETF you’re not buying the asset itself but buying a stake in a conglomerate that holds positions in the asset or group of assets themselves. So, in the case of a crypto ETF, you are not actually buying units of the BTC or ETH, but instead buying shares in a company that mirrors the performance of the crypto of interest.

If you bought an asset such as BITO on eTrade, you wouldn’t actually be buying Bitcoin. However, your account balance would reflect any upwards or downwards movement by the token, as BITO is an ETF that directly track Bitcoin’s performance.

Benefits and Downsides of ETFs or Stocks

There are two main benefits to investing in an ETF or stock rather than directly investing in a digital asset. The main benefit is that it is easier to exit a position for cash, as the ETF or stock is solely bought and sold for fiat. This means that when the profit is appealing an investor can easily cash out and can easily use a Tax-Free Savings Account (TFSA) to do so without having to pay tax. The other benefit is that you do not need any knowledge on how to send cryptocurrency transactions or use a crypto wallet. This helps in making ETFs a low technological barrier of entry for new investors.

There are also two main downsides to investing in an ETF or stock. The main downside is that you aren’t directly buying the underlying asset, but instead a stake in the company who owns it. If Bitcoin or Ethereum explode in value, the ETF or stock share is likely to go up, but the profit margin is likely lower than if you bought the asset directly. The other downside is that you do not get the utility of the crypto asset, meaning you cannot use it as a currency. If you have $20,000 in a Bitcoin ETF you will not be able to buy something that costs $20k in BTC without first selling your position and then buying Bitcoin to make the purchase. Both of which will incur fees and reduce overall profits.

Will eTrade Ever Offer Crypto?

While eTrade has not stated whether they will offer cryptocurrencies for direct purchase in the future, it seems possible that it will. This is because the crypto sector is growing, and eTrade would prefer that users did not go to another platform to make an investment that eTrade could simply add support for.

In the meantime, ETFs and stocks are the only options on eTrade.

Alternatives to eTrade That Offer Crypto

Fortunately there are a number of Questrade alternatives that do offer crypto exposure in addition to traditional stocks and bonds. Here’s a look at some of the most popular platforms that offer crypto and stocks: