Cryptocurrency at Wealthfront

We offer long-term exposure to Bitcoin through the iShares by Blackrock Bitcoin Trust (IBIT) and Ethereum through the iShares by Blackrock Ethereum Trust (ETHA).

As of March 21, 2024 the primary bitcoin ETF that Wealthfront offers is IBIT, not GBTC. As of September 9, 2024 the primary ethereum ETF that Wealthfront offers is ETHA, not ETHE. Clients who hold the previously offered GBTC or ETHE will not be sold out of their holdings as a result of switches to IBIT and ETHA. All new purchases of the Bitcoin or Ethereum ETFs will be IBIT and ETHA, not GBTC or ETHE.

Wealthfront offers Grayscale’s Bitcoin ETF (GBTC) and Ethereum ETF (ETHE) as “holdable” assets.

Cryptocurrency	Symbol
Bitcoin	IBIT
Ethereum	ETHA

Both of these investments are trusts offered as ETFs on the NASDAQ exchange. You can add either of these to your portfolio in your Automated Investing Account, and we’ll transition you in and out of these investments tax-efficiently.

Important things to note:

• We don’t offer individual coins or wallets
• Cryptocurrency investments carry significant risk! We limit your cryptocurrency allocation to no more than 10% of your portfolio value
• Cryptocurrency Trust ETFs aren’t eligible for Tax-Loss Harvesting
• Cryptocurrency Trust ETFs can’t be used as collateral for PLOC

What are cryptocurrency ETFs? 

We offer exposure to cryptocurrencies through shares of Blackrock’s iShares IBIT ETF and ETHA ETF. These funds each hold a single type of cryptocurrency coin, similar to how ETFs and other funds hold stocks, bonds, or other assets, but with less diversification.

How do they work?

Cryptocurrency ETFs, including IBIT and ETHA are trusts that each hold investments in a single type of coin, which firms keep in offline, “cold” storage. Each trust’s coins are stored separately (not commingled across the funds or with other assets) and are not lent out. When you buy a share of a trust, you own a portion of the trust, which provides indirect exposure to cryptocurrency. 

Risks to be aware of before investing:

• Cryptocurrency may be more volatile than other investments and can be influenced by unpredictable external events that affect confidence in the crypto ecosystem
• Cryptocurrency is at additional risk of electronic attacks

FAQs

Can I own cryptocurrency directly through Wealthfront?

No. At this time, we only offer exposure to cryptocurrency through trusts offered as ETFs. You can’t own individual coins or add coins to a crypto wallet. We offer cryptocurrency as a diversification asset within a long-term investment strategy, not as a short-term investment or form of payment.

Why can’t cryptocurrency exceed 10% of my total portfolio value?

To help clients avoid creating an overly risky portfolio, you can’t set your cryptocurrency allocation, in the form of cryptocurrency ETFs (ETHA and IBIT), to more than 10% of your portfolio’s total value. We consider cryptocurrencies, such as Bitcoin and Ethereum, and cryptocurrency trusts risky for a few reasons:

Cryptocurrency is significantly more volatile than most securities-based ETFs

Over the five-year period ending on October 31, 2022, SPY (the SPDR S&P 500 ETF Trust), a common measure of general market performance, experienced a realized volatility of 21.2%.1 Over the same time period, Bitcoin experienced a volatility of 77.9%, almost four times as volatile.2 High volatility may come with bigger upside, but also is more likely to create larger dips in value as well.

Cryptocurrencies and cryptocurrency ETFs are more susceptible to electronic attacks

Since cryptocurrency assets can be stored online, they can be “hacked” more easily than an ETF that holds stocks or bonds. However, 100% of Blackrock’s cryptocurrency assets are stored offline (“held in cold storage”), greatly reducing the risk of theft.

How are the coins inside the cryptocurrency ETFs protected?

The cryptocurrency trust ETFs that we offer hold 100% of the coins in the trusts in cold storage (offline), which is considered one of the most secure ways to store cryptocurrency. Blackrock does not lend the underlying coins out. Additionally, these assets are partially covered by insurance in the case of theft.

Which accounts allow me to invest in cryptocurrency ETFs?

The cryptocurrency trust ETFs are available to clients who have an Automated Investing Account. This includes both taxable and tax advantaged accounts like IRAs.

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1. CRSP, Center for Research in Securities Prices, LLC, http://www.crsp.org/

2. FRED, Economic Research Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CBBTCUSD