January 12, 2024
Bitcoin ETF Launches On Birdwingo!
The US financial regulator (SEC) has approved the first Bitcoin ETF. Birdwingo is the first platform in the Central Europe to launch it.
By Andrej Hano, Birdwingo’s Co-founder 🚀
On Wednesday night, the United States financial regulator SEC approved the first 11 Bitcoin ETFs that are allowed to trade on the stock market. Starting today, all Bitcoin ETFs can be traded on Birdwingo.
🤔 What is a Bitcoin ETF and how does it work?
Bitcoin ETFs operate similarly to standard exchange-traded funds. An asset management company, serving as the ETF issuer, buys and safely stores the underlying asset with a custodian. Following this, the company issues shares of its fund, allowing investors to gain exposure to the assets held within the fund.
🤔 What does this mean?
The introduction of Bitcoin ETFs marks a significant shift in how individuals engage with Bitcoin investments. Traditionally, your options were limited to direct investment in Bitcoin or investing in Bitcoin-related companies. Now, with Bitcoin ETFs, there’s a third, more streamlined and arguably safer option: investing through the stock market, which mirrors Bitcoin’s performance, but without the complexity, lack of security, and high taxes often associated with crypto investments.
Large asset management companies, like Vanguard or BlackRock, started creating ETFs that directly copy Bitcoin’s performance. In other words, instead of hopping on a Crypto Exchange and buying Bitcoin directly, you can go to the Stock Exchange and buy Bitcoin ETFs that move exactly like Bitcoin.
❓Why is it a big deal?
Enhanced Security and Reduced Risks
One of the most notable changes with the introduction of Bitcoin ETFs is the increased level of security. Bitcoin ETFs are now classified as standard ETFs, like the S&P 500 ETF and others.
Therefore they are protected under the government-backed investment protections, such as the SIPC in the US. This means that investments into Bitcoin ETFs on Birdwingo are protected up to $500 000 (~450 000 €) for each individual user account. This further decreases the risk of scams and misappropriation of funds, such as the one by FTX and others in the crypto industry.
Tax Benefits for Investors
Many European Union countries levy high taxes on gains from crypto. Particularly, investors in Czechia, Slovakia, Spain, Portugal, and France will find the tax implications of Bitcoin ETFs very advantageous.
Unlike direct cryptocurrency investments, crypto gains were often regarded as personal income tax which is often taxed heavily. Investments in Bitcoin ETFs are taxed under the more favorable rules applied to stocks and other ETFs.
Case studies: Understanding the new tax benefits for Bitcoin ETFs in Czechia and Slovakia
Analysis provided by law firm Eldison
Investing in Bitcoin ETFs is about to become more tax-efficient for investors in the Czech Republic and Slovakia. Ondřej Stříbný of Eldison highlights this shift, stating that “Until now, it wasn’t possible for Czech and Slovak tax residents to apply the same taxation regime to cryptocurrency investments as they could with other securities and ETFs.” The introduction of Bitcoin ETFs changes this, aligning them with the more favorable tax conditions of traditional securities. Here’s a breakdown to help you understand how it works:
- Before: Profits from cryptocurrency sales taxed at 15% (23% for high earners), without additional health and social insurance contributions.
- Now with Bitcoin ETFs: If you hold a Bitcoin ETF for over 36 months and sell it for profit, no capital gains tax is due.
- Before: Cryptocurrency sales income taxed at 19% (25% for high earners), with health and social insurance contributions.
- Now with Bitcoin ETFs: Holding a Bitcoin ETF for more than 12 months and selling at a profit exempts you from capital gains tax.
🛡️ What are the tickers that will be available on Birdwingo?
Starting today, all 11 approved Bitcoin ETFs are available on Birdwingo. All can also be bought fractionally from as little as 1 € or 25 Kč:
- Blackrock’s iShares Bitcoin Trust (IBIT)
- ARK 21Shares Bitcoin ETF (ARKB)
- WisdomTree Bitcoin Fund (BTCW)
- Invesco Galaxy Bitcoin ETF (BTCO)
- Bitwise Bitcoin ETF (BITB)
- VanEck Bitcoin Trust (HODL)
- Franklin Bitcoin ETF (EZBC)
- Fidelity Wise Origin Bitcoin Trust (FBTC)
- Valkyrie Bitcoin Fund (BRRR)
- Grayscale Bitcoin Trust (GBTC)
- Hashdex Bitcoin ETF (DEFI)
⚠️ Watch out, there’s always a risk!
Investing in Bitcoin ETFs is highly risky. Bitcoin ETFs copy the value of Bitcoin, which is a highly volatile asset. While these ETFs offer a new way to invest in Bitcoin, they do not diminish the inherent volatility and risk associated with Bitcoin itself.
Birdwingo does not endorse this ETF, nor takes responsibility for losses incurred by investing in Bitcoin ETFs. Please stay smart and invest responsibly.
💵 What about the fees?
Until the 19th of January, a standard trade fee of 0.49% (max. 1 € or 25 CZK) applies. Just like for other stocks and ETFs on Birdwingo. After the 19th of January, a trade fee of 1.49% will apply with a min. fee of 2.99 € or 75 CZK. This is due to higher third-party costs associated with these assets.
Relatively high volatility (volatility) of the price of these products is expected, so it is recommended to remain cautious and always invest only money that one can afford to lose.
📲 What is Birdwingo?
Birdwingo is a go-to investing app with more than 20k users where you can invest in stocks & ETFs like Apple, Tesla, S&P 500 ETF & more.
What do we offer?
- 11,000+ most popular stocks & ETFs
- lowest fees on the market
- personalised portfolios