Which Brokerages Offer Crypto Trading?

From the wrong side of history department via Vanguard’s website: 

The recent introduction of spot bitcoin ETFs has been generating headlines and buzz in pockets of the industry. However, Vanguard does not have plans to create a Vanguard bitcoin ETF or other crypto-related products. Additionally, such products from other issuers will not be offered on our brokerage platform.

Yikes!

But, go ahead—

When deciding what investment products to offer, we consider a range of factors, including whether we believe they have enduring investment merit and meet our clients’ needs. While the discussion about bitcoin and cryptocurrencies, in general, has increased recently, we do not currently believe that there is an appropriate role for them to play in long-term portfolios …

In Vanguard’s view, crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products, whether our own or others. With equities, you own a share of a company that produces goods or services, and many also pay dividends. With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios. While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.

We think it’s important to highlight Vanguard’s stance on this. 

It’s interesting, but slightly troubling if not old and stodgy. And also important to note that Vanguard is primarily known for pioneering low-cost, index ETFs. So, in no way, is The Juice bashing Vanguard here. A quick scroll through The Juice’s recent history of installments clearly shows that we favor this investment approach. In fact, we’re all about it. 

That said — as we’ll expand on next week when we cover alternative investing ideas, we’re also living through times when today’s investor has exponentially more choices and places to put their long- and short-term money than ever before. This isn’t your Mom’s, Dad or Grandparents’ market. And the most savvy Moms, Dads, Grandmas and Grandpas are expanding their horizons beyond only stocks, bonds and cash if it suits their specific situations. 

Plus, it’s tough to argue with Bitcoin’s (BTC) performance against, for example, the SPDR S&P 500 ETF Trust (SPY) or Vanguard’s S&P 500 tracker, the Vanguard S&P 500 ETF (VOO). 

Volatility aside, name the timeframe and Bitcoin crushes both (we only use SPY in the chart because, as index trackers, SPY and VOO produce almost identical returns). 

So, we have to wonder if Vanguard’s new CEO, Salim Ramji, who comes from BlackRock will help bring Vanguard in step with the times. 

BlackRock’s iShares Bitcoin Trust (IBIT) is the largest cryptocurrency fund in the world. While Ramji wasn’t in charge of it, we have to assume he was in on the meetings. It’ll be interesting to see what, if anything, develops at Vanguard. He says things will remain status quo at Vanguard, but people say lots of things. And reports indicate that Ramji supported the BlackRock Bitcoin ETF launch. 

For the record, IBIT has outperformed SPY +44.8% to +11.6% YTD. IBIT launched this year on January 11.  

So, if you’re looking to buy or sell a crypto ETF, let alone individual cryptocurrency itself, you’re out of luck, at least for now, at Vanguard. 

How about at some of the other large or otherwise notable brokerages?

As far as the other big boys go, Fidelity keeps Fidelity Crypto separate from its brokerage service and permits Bitcoin and Ethereum trading with no commissions (though it does charge a 1% spread) and a $1 minimum investment. Taking the opposite approach of Vanguard, Fidelity touts that it has been “a leader in crypto for nearly a decade.”

The other big boy, which just so happens to be the third most-searched financial services stock in our Trackstar database right now, Charles Schwab (SCHW) does not allow trading in individual cryptocurrencies, but it does permit trading of cryptocurrency futures, trusts and crypto-related mutual funds and ETFs, including spot Bitcoin ETFs and Schwab’s own Schwab Crypto Thematic ETF (STCE), which invests in a basket of stocks doing business in the digital asset industry. 

As far as other notable names go:

• Robinhood: Offers commission-free trading in a wide assortment of popular coins. While Robinhood doesn’t charge commissions it makes money by accepting payment for order flow on crypto transactions. 
• ETrade: Owned by the fourth most-searched financial services stock in Trackstar, Morgan Stanley (MS), ETrade does not offer individual cryptocurrency trading, but includes crypto stocks, futures and ETFs on its platform. 
• Interactive Brokers: They’re number five in Trackstar today, offering trading in Bitcoin, Bitcoin Cash, Ethereum and Litecoin. You’ll pay $1.80 for every $1,000 in crypto traded, which beats the fees charged by other brokerages that permit crypto trading, such as Coinbase and eToro. 

The Bottom Line: That’s a quick overview of how some of the major brokerage players handle cryptocurrency. If you’re opening a brokerage account, don’t assume it includes crypto trading. Be sure to search the website or ask. 

In future weeks and months, The Juice will provide more details on different investment platforms, including those that can give you relatively inexpensive exposure to alternative asset classes.

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