Cryptocurrencies have now gone mainstream. Everybody from the milkman to your old aunt knows about it. And Charles Schwab, being one of the biggest financial services companies in the world, has many clients wondering if they can buy crypto through them. Well, that’s what we’ll be exploring today.
Charles Schwab does not at this time offer investors the possibility to directly buy crypto. But you can get exposure to the crypto market by buying an over-the-counter (OTC) trust product that correlates with the price of Bitcoin or by buying Bitcoin futures offered at Schwab.
In this article, we are also going to see if Schwab will ever offer Crypto, why they don’t offer it right now, what alternative ways you can buy it through, etc.
Let’s get started…
Is Schwab Ever Going to Offer Cryptocurrencies?
According to an article on The Block, an insider source has informed them that the Charles Schwab Corporation is getting ready to launch a cryptocurrency brokerage or exchange by the end of 2021. If this rumor proves to be true, I would be quite surprised to see such a turn in opinions from Schwab, considering how they’ve previously talked about Bitcoin and crypto in general.
And a giant like the Charles Schwab Corporation finally starting to offer Bitcoin will undoubtedly make new money enter the market. It will also help in the quest for Bitcoin and maybe other cryptocurrencies in becoming widely used and adopted.
Why Doesn’t Schwab Offer Cryptocurrencies?
On a blog post on the Charles Schwab Corporation website, called “How Risky is it to Buy Cryptocurrency?”, Carrie Schwab-Pomerantz, the senior vice president of the corporation shared her thoughts and we can suppose the company’s position on cryptocurrencies.
The article described the cryptocurrency market as being extremely volatile. Therefore, it can yield the investor huge gains and obviously staggering losses. And I can’t say she doesn’t have a point.
She goes on to describe how risky trading crypto is due to a lack of regulation and the currency not being backed by any government or central bank. Therefore, even though crypto is designed as a theft-proof asset, owners are at considerable risk of fraud or cybercrime.
The point she makes is what would typically be said by critics and skeptics of the emerging cryptocurrency market, and are in some ways valid. So it is understandable that Schwab does not want to be exposed to this kind of problems.
What Are Some Alternative Exchanges to Buy Crypto?
Here are some of the best centralized exchanges to buy crypto from:
And if you’d rather buy from a decentralized exchange, then you can go with these ones:
How Can I Trade Crypto Futures at Charles Schwab?
The first step is to open a Schwab futures account. This will allow you to trade futures contracts, including Bitcoin on the Chicago Mercantile Exchange (CME).
Once you’ve done this you can start trading Bitcoin with Charles Schwab’s browser platform called StreetSmart Central. You can find it on the Schwab website by clicking on the Trading Hub link. And Schwab also provides the opportunity to trade futures anywhere you are on the StreetSmart mobile app, which makes everything a lot more convenient.
What Are The Fees when Buying Crypto Futures on Charles Schwab?
Schwab will charge $1.50 for every transaction of all future trades and that includes Bitcoin futures.
What’s The Difference Between Crypto and Crypto Futures?
A futures contract is an agreement to buy or sell an asset when a future date is reached, for an already predetermined cost.
The buyer also called a long, of a Bitcoin future will want the price of Bitcoin to go up. On the other hand, the seller also known as a short will be making a profit if the price of Bitcoin goes down.
Buying a crypto future is different than buying crypto directly because you don’t own the coin, you are just speculating on the future price.
What Is The Best Crypto OTC Bitcoin Trusts I Can Buy at Charles Schwab?
In my opinion, the best and most well-known Bitcoin OTC you can buy on Charles Schwab is the Grayscale Investments’ Bitcoin Investment Trust. It excels at allowing accredited investors to indirectly own Bitcoin through a trust.
Schwab allows you to buy equity in the form of a share in the Grayscale Bitcoin Investment Trust which owns Bitcoin as their main holding, on part of the shareholders.
Note that the trust’s management fees are very high, over 2 percent a year. It should be considered by investors who want to limit their exposure to the Bitcoin market by investing indirectly in this booming digital asset. Since it is protected by stricter regulation, it’s also at a lesser risk of fraud or theft.
Unfortunately, you have to be first legally classified as an accredited investor, which as you probably already know is not that easy. Because the SEC hasn’t, as of today, yet approved a Bitcoin ETF that would work similarly to a trust and could be owned by the everyday retail investor.
Unfortunately, you cannot directly buy cryptocurrency at Schwab. But you can still indirectly benefit from this booming, new and exciting market, which is still in its first steps. Schwab offers the Grayscale trust which will give you exposure to the value of Bitcoin.
Charles Schwab does not see Bitcoin and crypto in general in a positive light as they have proven time and time again. That’s why they probably do not yet allow direct investment in them.
But with a bit of good fortune and Bitcoin becoming increasingly mainstream, I think things might change sooner rather than later and Schwab will embrace this revolution.
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