Cryptocurrency investing at Schwab
The topic of cryptocurrency has been in the media for years, but we're now seeing it take a more prominent role in the mainstream investing landscape with more advisors—and their clients—expressing interest in this asset class. If you're new to the discussion, you're not alone. In fact, 88% of advisors received questions about cryptocurrency from their clients in 2023, which was reflected in the Bitwise/VettaFi 2024 Benchmark Survey of Financial Advisors Attitudes Toward Crypto Assets conducted in January 2024.
This article provides an overview of how cryptocurrency works, insight into why it has become so popular, and how you can gain exposure to cryptocurrency through Schwab.
Cryptocurrency basics
Cryptocurrency is a virtual (or digital) currency secured through one-way cryptography. It appears on a distributed ledger called a blockchain, which is transparent and shared among all users in a permanent and verifiable manner.
The original intent of cryptocurrency was to allow parties to make online payments to each other without the need for a central third-party intermediary, like a bank. However, with the introduction of smart contracts, non-fungible tokens, stablecoins, and other innovations, additional uses and capabilities are rapidly evolving.
Cryptocurrency's value stems from a combination of scarcity and the perception that it is a store of value, an anonymous means of payment, or a hedge against inflation. You can buy or sell cryptocurrency directly in a spot market, or you can invest indirectly in a futures market or in investment products that provide cryptocurrency exposure.
Why are cryptocurrencies so popular?
Cryptocurrencies appeal to investors for many reasons. Some view them as the currency of the future and want to buy them now based on their belief that cryptocurrency will become more valuable. A prime example is bitcoin, one of the most popular forms of cryptocurrencies, with an estimated total market cap over $3 trillion as of February 20, 2025.1 Other investors are mainly interested in the underlying blockchain technology because they see it as more secure than traditional payment systems.
Ways to invest in cryptocurrency at Schwab
Schwab has several choices for gaining exposure to the cryptocurrency markets, though spot trading of cryptocurrency is not currently available.
Cryptocurrency-related ETPs or Mutual Funds
Exchange-Traded Products (ETPs and ETFs) and mutual funds with cryptocurrency-related investments have been available for several years. Certain types of cryptocurrency-related ETPs and mutual funds do not invest directly in cryptocurrencies, such as bitcoin or ether, but may invest in companies that operate in the digital asset and cryptocurrency ecosystem. For example, these may include companies that offer trading, custody, or mining of cryptocurrencies. They may also invest in derivatives such as cryptocurrency futures, which are agreements to buy or sell a specific quantity of bitcoin at a specified price on a particular future date. Cryptocurrency-related products carry unique and substantial levels of risk, and only sophisticated traders with a full understanding of the nature of these products and a high tolerance for risk should consider the potential appropriateness for their own portfolios.
More recently, the SEC approved ETPs that hold spot cryptocurrency and seek to track the price of bitcoin or ether, and these ETPs are available at Schwab. A spot bitcoin ETP, or spot ether ETP, refers to an ETP that invests directly in bitcoin or ether, respectively, as opposed to investing in derivatives, such as futures. The SEC has received filings for ETPs on other spot cryptocurrencies, like Solana, so it's possible more types of spot cryptocurrency ETPs will be available pending SEC approval.
Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Cryptocurrency-related products that use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency may have unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended.
Visit the Research tab of Schwab Advisor Center® and use the screener to view all cryptocurrency-related ETPs in the Digital Assets Morningstar Category.
Cryptocurrency Coin Trusts
Cryptocurrency coin trusts allow investors to trade shares in trusts holding large pools of a cryptocurrency. However, these products can involve high volatility, hefty fees, commissions, and other risks. They trade over the counter and behave like closed-end funds.
Cryptocurrency Stocks
Some stocks provide indirect and varied exposure to cryptocurrency because their businesses have a focus on electronic payments or products that utilize blockchain or cryptocurrency. Examples of such stocks include COIN, MSTR, XYZ, and PYPL.
In summary, we suggest that clients interested in cryptocurrency can approach them as extremely speculative and more high-risk products and consider their goals as well as the risks involved since cryptocurrencies are also not regulated. There are some potential benefits that can make them attractive to some investors, including the potential for appreciation and the addition of a non-correlated asset for diversification. However, there is still potential for significant financial loss as cryptocurrency prices have proven to be highly volatile, and fluctuations could result in significant financial losses. Certain cryptocurrency products, like coin trusts, can have high expenses, with fees exceeding 2% or more of investment. Given the increased media coverage and growing influence of cryptocurrency, you may receive more questions from clients—especially younger clients.
We'll continue to bring you insights on this important topic, along with updates on any new opportunities to gain exposure to cryptocurrency through the Schwab platform.
What you can do next
- Get expert perspectives on market and investing trends through the Schwab Center for Financial Research (SCFR) and Schwab Asset Management®.
- Consider a custodian that invests in your success. If you're thinking about becoming an independent advisor, contact us to learn more about the benefits of a custodial relationship with Schwab.
1 Cryptocurrency Prices Today By Market Cap, forbes.com/digital-assets/crypto-prices.
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Please note that virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Virtual currencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies. Profits and losses related to this volatility are amplified in margined futures contracts.
Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.
Currency trading is speculative, volatile, and not suitable for all investors.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.
Virtual Currency Derivatives trading involves unique and significant risks. Please read NFA Investor Advisory.
All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.