For Mom-and-Pop investors, it’s getting easier to buy cryptocurrency as part of a traditional stock-and-bond portfolio.
But the costs can add up, and it’s key to prepare for a possible tax bill down the road.
Bitcoin, the most popular cryptocurrency, has posted an eye-popping rally—it increased in value more than 300% in 2020 and has more than doubled in price so far this year to top $59,000 on Friday.
If you’re comfortable purchasing crypto such as Bitcoin, Ethereum, and others, an exchange is the most direct way.
Anyone with a credit card and an email address can buy and sell on the many exchanges popping up, such as CoinDesk, Coinbase, Bittrex US, Kraken, Circle Financial and Genesis.
“It’s important to do you due diligence about which exchange” you use, said Stephen Stonberg, CFO and COO of Bittrex Global, which also runs the Bittrex U.S. exchange. The company was founded by former Amazon and Microsoft executives in 2014.
“Some do substantial know-your-customer due diligence. Others just let you open an account with an email address,” he said. The more background the exchange requires, the safer your account will be.
But if that’s too risky, there are now a new crop of exchange-traded funds, or ETFs, and investment trusts that hold cryptocurrency as the main asset. These trade like stocks on Wall Street exchanges such as Nasdaq and the New York Stock Exchange.
But the cost is higher as banks and investment firms offer with high fees.
GBTC, the Grayscale Bitcoin trust, is one such quasi-ETF, which holds Bitcoin.