Fidelity Canada launched Thursday the Fidelity advantage Bitcoin exchange-traded funds (ETF) as well as the Fidelity advantage Bitcoin ETF Fund (mutual Fund). This marks the official launch of these assets and confirms earlier reports. They are listed on Toronto Stock Exchange under the tickers FBTC.U and FBTC.U and denominated as Canadian and United States Dollars. Fidelity’s Bitcoin ETFs track the spot price of Bitcoin (BTC). Fidelity currently has assets worth CA$208 billion (or 162.27 billion).
ETFs will be subject to an annual management fee equal to 0.4%. The assets are still in their infancy so trading and operating costs are not yet possible. Cold wallets are where 98% of the Bitcoin funds have been purchased.
The implications are significant for Canadian retail investors who open government-registered accounts, such as the Tax-Free Savings Account (TFSA), and purchase Bitcoin ETFs. As the name suggests, capital gains taxes are not applicable to securities in a TFSA.
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The annual contribution limit for a TFSA is CA$5,000 ($3,903) to CA$10,000 (CA$7,807). The cumulative effect of unutilized contributions is that they are carried forward from previous years. All realized profits from the TFSA are also added to the contribution room. Hypothetically, an investor could buy $10,000 in Bitcoin ETFs and then sell them for $20,000; capital appreciation will result from reinvesting $20,000 instead of $10,000. This would qualify for capital gains exclusion.