What Charles Schwab offers for cryptocurrency
Charles Schwab does not let you buy, sell, or hold cryptocurrency directly through a standard brokerage account. You cannot purchase Bitcoin, Ethereum, or other digital assets the way you would buy stocks or mutual funds on their platform.
However, Schwab offers two indirect routes to cryptocurrency exposure. The first is through cryptocurrency trusts and ETFs — investment products that track crypto prices without you owning the underlying coins. The second is through Schwab Crypto, a separate service that lets you trade digital assets, though it operates outside your main brokerage account and has different rules.
The distinction matters because these options have different costs, tax treatment, and custody arrangements. Understanding which route fits your situation requires knowing what each one does and what it costs.
Key Takeaways
- Charles Schwab's main brokerage platform does not offer direct cryptocurrency purchases, but you can buy crypto-tracking ETFs and trusts through your regular account.
- Schwab Crypto is a separate service where you can buy and hold actual Bitcoin and Ethereum, but it is not connected to your brokerage account and has its own fee structure.
- Crypto ETFs and trusts trade during stock market hours and settle like stocks, while Schwab Crypto operates 24/7 with different settlement rules.
- Tax reporting differs between these options: ETFs generate standard 1099 forms, while Schwab Crypto transactions may require additional reporting.
Buying crypto-tracking ETFs and trusts through your Schwab account
The simplest way to gain cryptocurrency exposure through Charles Schwab is to buy an exchange-traded fund (ETF) or trust that holds cryptocurrency or tracks its price. These trade on stock exchanges during regular market hours — 9:30 a.m. to 4 p.m. Eastern Time — and settle like any stock purchase.
Examples include the Grayscale Bitcoin Trust (ticker: BTC), the Grayscale Ethereum Trust (ticker: ETH), and spot Bitcoin ETFs such as those from iShares or Fidelity. You search for these by ticker symbol in your Schwab account, place an order, and own shares just as you would own shares of a company. Schwab does not charge a commission on most ETF purchases, though the ETF itself has an expense ratio — an annual fee that varies by fund.
This route has advantages: your crypto exposure sits in your regular brokerage account alongside your stocks and bonds, you receive a standard 1099 tax form at year-end, and you can use the same order types (limit orders, stop-loss orders) you use for stocks. The trade-off is that you do not own the actual cryptocurrency — you own a share of a fund that holds it or tracks its price. If the fund closes or faces legal issues, your investment could be affected differently than if you owned the coins directly.
Using Schwab Crypto for direct cryptocurrency ownership
Charles Schwab operates Schwab Crypto, a separate platform where you can buy, sell, and hold actual Bitcoin and Ethereum. This is not part of your main brokerage account — it is a distinct service with its own login, wallet, and fee structure.
To use Schwab Crypto, you must be a Charles Schwab customer, but you access it through a separate interface. You can transfer money from your Schwab bank or brokerage account to fund your crypto purchases, but the cryptocurrency itself lives in a Schwab-managed wallet, not in your brokerage account. Schwab Crypto operates 24/7, unlike the stock market, so you can trade at any time.
Schwab Crypto charges a spread — a markup on the price you pay to buy or receive when you sell — rather than a flat commission. The spread varies based on market conditions and the size of your trade. There is no monthly fee to hold cryptocurrency on the platform. You own the actual coins, which means you have the security and tax implications of direct ownership, but Schwab holds them in custody for you.
Cost differences between the two routes
Crypto-tracking ETFs charge an annual expense ratio, typically ranging from 0.2% to 2.5% per year depending on the fund. This fee is deducted automatically from the fund's value, so you pay it whether the price goes up or down. You also pay the bid-ask spread when you buy or sell shares, just as you would with any stock.
Schwab Crypto charges a spread on each buy and sell transaction but no annual holding fee. The spread is typically 1% to 2% on each side of the trade, though it can vary. If you trade frequently, these spreads add up. If you buy and hold for years without trading, you pay nothing beyond the initial and final spreads.
For a long-term holder, an ETF with a low expense ratio (under 0.5%) may cost less over time. For someone who trades actively, the comparison depends on how often you trade and the size of each trade. Neither route is free, and both involve costs that reduce your returns.
Tax reporting for each option
If you buy a crypto ETF or trust through your Schwab brokerage account, you receive a 1099-B form at tax time showing your sales and a 1099-DIV if the fund pays dividends. You report these on your tax return like any other investment. If you hold the ETF for more than one year before selling, the gain is taxed as a long-term capital gain, which typically has a lower tax rate than short-term gains.
Schwab Crypto transactions are reported differently. Schwab sends you a 1099-K if your transactions exceed certain thresholds, but the exact reporting depends on your activity level and your state. Because you own actual cryptocurrency, each buy and sell is a taxable event — the IRS treats it as a sale of property. If you receive cryptocurrency as a gift or through other means, you may also owe tax on the fair market value at the time you receive it.
Both routes require you to track your cost basis (what you paid) and the date of each transaction to calculate gains or losses accurately. Keeping detailed records is essential for both ETFs and direct crypto ownership.
Security and custody considerations
When you buy a crypto ETF, Charles Schwab holds the shares in your account, and the ETF issuer (such as Grayscale or iShares) holds the underlying cryptocurrency. Your shares are protected by SIPC (Securities Investor Protection Corporation) insurance up to $500,000 per account category, the same protection that covers stocks and bonds. The cryptocurrency itself is held by the ETF issuer's custodian.
With Schwab Crypto, Schwab holds the actual cryptocurrency in custody for you. Schwab uses cold storage (offline vaults) for the majority of customer assets and maintains insurance coverage, but the specifics of that insurance and Schwab's security practices should be reviewed in their Schwab Crypto terms of service. You do not control the private keys to your cryptocurrency — Schwab does — which means you cannot move your coins to another wallet or exchange without withdrawing them first.
The trade-off is convenience versus control. An ETF gives you the security of traditional brokerage protections but no direct ownership of the coins. Schwab Crypto gives you direct ownership but requires you to trust Schwab's custody and security practices.
Which option makes sense for different situations
Choose a crypto ETF or trust if you want cryptocurrency exposure within your existing investment account, prefer not to manage a separate platform, or plan to hold for many years without trading frequently. ETFs are also simpler for retirement accounts — some IRAs allow ETF purchases but not direct cryptocurrency ownership.
Choose Schwab Crypto if you want to own actual Bitcoin or Ethereum, plan to trade more actively, or want the ability to move your coins off the platform. Schwab Crypto is also useful if you want to take advantage of 24/7 trading rather than waiting for stock market hours.
Some investors use both: they might hold a long-term position in a crypto ETF in their retirement account while using Schwab Crypto for shorter-term trading or to own specific coins. The choice depends on your goals, how often you plan to trade, and whether you want direct ownership or are comfortable with fund-based exposure.
Frequently Asked Questions
Can I buy cryptocurrency in a retirement account through Charles Schwab?
You can buy crypto-tracking ETFs in a traditional or Roth IRA through Charles Schwab, and these count toward your annual contribution limit. Direct cryptocurrency purchases through Schwab Crypto are not available in retirement accounts. Check with Schwab about which specific crypto ETFs are available in your account type, as some IRAs have restrictions.
What happens if Charles Schwab shuts down Schwab Crypto?
If Schwab discontinues the service, you would have a period to withdraw your cryptocurrency to an external wallet or exchange. Schwab would notify you in advance. Your cryptocurrency would not disappear, but you would need to move it or convert it to another form. Review Schwab's terms of service for their specific policy on service discontinuation.
Can I transfer cryptocurrency from another exchange into Schwab Crypto?
Schwab Crypto does not currently support deposits of cryptocurrency from external wallets or exchanges. You can only fund Schwab Crypto by transferring money from your Schwab bank or brokerage account and then purchasing cryptocurrency on the platform. If you already own crypto elsewhere, you would need to sell it and transfer the cash to Schwab, or keep it where it is.
How long does it take to buy crypto on Schwab Crypto?
Once you fund your Schwab Crypto account with cash from your Schwab bank or brokerage account, the transfer typically takes one to two business days. After the funds arrive, you can purchase cryptocurrency when ready. The actual purchase executes at the current market price plus Schwab's spread.
Do I owe taxes when I buy cryptocurrency on Schwab Crypto?
No tax is owed straightforward by purchasing cryptocurrency. You owe tax when you sell it (or exchange it for another cryptocurrency), when you use it to buy something, or when you receive it as income. Holding cryptocurrency without selling does not trigger a tax event, even if the price rises.