Charles Schwab does not offer direct cryptocurrency trading through its main brokerage platform

Charles Schwab does not let you buy or sell Bitcoin, Ethereum, or other cryptocurrencies directly in your Schwab brokerage account. You cannot place a crypto order the way you would place a stock order. If you want to own cryptocurrency itself — not a fund or derivative based on it — you will need to use a separate platform.

However, Schwab does offer ways to gain exposure to cryptocurrency prices without owning the coins directly. These options exist within your regular Schwab account and follow the same tax and regulatory rules as other investments you make there.

Key Takeaways

  • Charles Schwab does not allow direct purchase of Bitcoin, Ethereum, or other cryptocurrencies in your brokerage account.
  • You can buy cryptocurrency futures contracts and cryptocurrency-focused ETFs through Schwab, which track crypto prices without requiring you to own the coins.
  • Cryptocurrency futures are available on Schwab's StreetSmart Edge platform and require a separate futures account with higher minimum deposits.
  • Cryptocurrency ETFs trade like regular stocks and require no special account setup, though Schwab's crypto ETF selection is limited compared to other brokers.
  • Gains from crypto investments held less than one year are taxed as short-term capital gains, the same as other short-term trades.

Cryptocurrency ETFs available through Schwab

A cryptocurrency ETF is a fund that holds cryptocurrency or cryptocurrency futures and trades on a stock exchange like a regular stock. When you buy a crypto ETF through Schwab, you own shares of the fund, not the cryptocurrency itself. The fund manager holds the actual coins or contracts and handles the storage and security.

Schwab offers access to several cryptocurrency ETFs, including spot Bitcoin ETFs and spot Ethereum ETFs that were approved by the SEC starting in 2024. These trade under ticker symbols like IBIT (iShares Bitcoin Trust) and FBTC (Fidelity Bitcoin Trust). You can buy and sell them during regular market hours just like any stock, with no special account requirements. Schwab does not charge commissions on ETF trades.

The main limitation is selection. Schwab's crypto ETF menu is smaller than what you will find at brokers like Fidelity or E*TRADE. If you want exposure to smaller cryptocurrencies or a wider range of crypto funds, you may need to look elsewhere. But for Bitcoin and Ethereum ETFs, Schwab's offerings are sufficient for most investors.

Cryptocurrency futures contracts on Schwab

Schwab offers cryptocurrency futures through its StreetSmart Edge platform, which is designed for active traders. A futures contract is a bet on the future price of an asset — in this case, Bitcoin or Ethereum. You do not own the cryptocurrency; you are agreeing to buy or sell it at a set price on a set date.

To trade crypto futures at Schwab, you need a separate futures account. Schwab requires a minimum deposit of $2,000 to open a futures account, though some contract types may require more. Futures trading involves leverage, meaning you can control a large position with a small amount of money. This amplifies both gains and losses, and you can lose more than your initial deposit.

Crypto futures are more complex than ETFs and are intended for experienced traders who understand how leverage works. If you are new to investing, crypto ETFs are a simpler way to track cryptocurrency prices. If you do trade futures, keep detailed records of all trades for tax purposes — the IRS requires specific reporting for futures contracts on Form 6781.

Why Schwab does not offer direct crypto ownership

Schwab's decision not to offer direct cryptocurrency trading reflects regulatory uncertainty and custody challenges. When you buy a stock through Schwab, the company holds it in a find system and insures it under SIPC protection. Cryptocurrency does not fit neatly into this model because it is not a security in the traditional sense, and custody rules are still being defined by regulators.

Some brokers like Kraken and Coinbase do offer direct crypto trading because they are registered as cryptocurrency exchanges, not traditional stock brokers. They operate under different regulatory rules and handle custody differently. Schwab has chosen to stay within its traditional brokerage framework and offer crypto exposure through regulated products like ETFs and futures instead.

This approach means less flexibility for investors who want to hold actual coins, but it also means your crypto investments at Schwab follow the same account protections and tax reporting as your other investments.

Tax reporting for crypto investments at Schwab

When you sell a cryptocurrency ETF or close a futures position at a gain, you owe capital gains tax. If you held the investment for one year or less, it is taxed as a short-term capital gain at your ordinary income tax rate. If you held it for more than one year, it is taxed as a long-term capital gain at a lower rate (0%, 15%, or 20%, depending on your income).

Schwab will send you a Form 1099-B for ETF sales and a Form 1099 for futures trades. These forms report your proceeds and cost basis. You report the gain or loss on Schedule D of your tax return. If you trade frequently, keep your own records as well, because Schwab's cost basis calculations can be wrong, especially if you reinvested dividends or made multiple purchases.

Cryptocurrency futures have an additional wrinkle: they are taxed under Section 1256 rules, which means 60% of gains are treated as long-term and 40% as short-term, regardless of how long you held the contract. This can result in a lower overall tax rate than regular short-term trades. Your Form 6781 will show this breakdown.

Alternatives if you want direct cryptocurrency ownership

If you want to own actual Bitcoin or Ethereum coins and Schwab's ETF and futures options do not meet your needs, you will need to open an account at a cryptocurrency exchange. Popular options include Coinbase, Kraken, Gemini, and Crypto.com. These platforms let you buy, sell, and hold cryptocurrencies directly.

Keep in mind that crypto exchanges operate under different rules than traditional brokers. They are not SIPC-insured, so if the exchange fails or is hacked, your coins may not be protected. Many exchanges do carry insurance, but the coverage is not may provide by the government. You are also responsible for managing your own security — if you lose your password or private key, your coins are gone.

If you choose to use a crypto exchange, you can still hold your Schwab account for stocks, bonds, and other traditional investments. Many investors use both: Schwab for their core portfolio and a crypto exchange for cryptocurrency exposure.

Frequently Asked Questions

Can I buy Bitcoin directly through my Schwab brokerage account?

No. Charles Schwab does not offer direct cryptocurrency trading. You can buy Bitcoin ETFs or Bitcoin futures through Schwab, but you cannot purchase Bitcoin coins themselves in your regular brokerage account. To own Bitcoin directly, you would need to open a separate account at a cryptocurrency exchange.

What is the difference between a crypto ETF and owning cryptocurrency directly?

A crypto ETF is a fund that holds cryptocurrency and trades like a stock. You own shares of the fund, not the coins themselves. The fund manager handles storage and security. Direct ownership means you hold the actual coins in a digital wallet. ETFs are simpler and more regulated; direct ownership gives you full control but requires you to manage security yourself.

Do I need a special account to trade cryptocurrency futures at Schwab?

Yes. Cryptocurrency futures trade on Schwab's StreetSmart Edge platform and require a separate futures account with a minimum deposit of $2,000. Your regular brokerage account cannot be used for futures trading. Futures involve leverage and are intended for experienced traders.

How are cryptocurrency gains taxed if I buy them through Schwab?

Gains from crypto ETFs are taxed as capital gains — short-term if held one year or less, long-term if held longer. Crypto futures are taxed under Section 1256 rules, which treat 60% of gains as long-term and 40% as short-term regardless of holding period. Schwab sends Form 1099-B for ETFs and Form 6781 for futures.

Is my cryptocurrency investment protected if I buy a crypto ETF through Schwab?

Your crypto ETF shares are protected under SIPC insurance the same way your stock holdings are, up to $500,000 per account. However, SIPC does not protect you if the ETF itself fails or the fund manager loses the underlying cryptocurrency. The fund manager typically carries separate insurance for the coins they hold, but this is not a government may provide.