Holding Bitcoin in Your TFSA and RRSP

Should investors hold their Bitcoin investments inside their TFSA or RRSP? Should they invest in an ETF such as Blockchain Technologies ETF (TSX:HBLK)? Here are some options and drawbacks to consider.

| More on:
A depiction of the cryptocurrency Bitcoin

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

I know you are still out there. Despite Bitcoin having fallen off a cliff, there are still investors who are bullish on the cryptocurrency. Judging by the negative headlines, you would think Bitcoin has no value. The truth of the matter is, Bitcoin has held up quite well as compared to other currencies.

Fun fact: although Bitcoin is trading well below its 52-week high, it’s still up almost 100% over the past year. Investors who bought in before its meteoric rise are doing just fine.

Outside of Bitcoin as an investment, one issue most often brought up with cryptocurrencies is the tax implications. The Canada Revenue Agency (CRA) has made it clear that cryptos are considered investments and as such are subject to capital gains tax. In effect, you are taxed 50% on any profit you make from digital currencies. Ouch. That alone is enough to scare investors away from investing in the sector.

Those law-abiding citizens are thus required to keep a detailed record of all transactions. This can be quite cumbersome and a nightmare come tax time. One way investors get around complicated tax situations is to hold their investments in a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). Can you hold Bitcoin in these accounts?

Indirect exposure

At the moment, investors cannot trade digital currencies in their registered accounts. You can certainly hold funds such as Harvest Portfolio’s Blockchain Technologies ETF (TSX:HBLK) and Horizon’s Blockchain Technology & Hardware Index ETF (TSX:BKCH). The problem with these funds, however, is that they are focused on blockchain technology.

Investors can also hold certain foreign funds that track digital currencies. However, investors are often subject to ridiculous fees and premiums.

If you are looking for a Canadian regulated fund that tracks Bitcoin, your best option at the moment is First Block Capital’s Bitcoin Trust (NEO:FBCBT). The fund is only available to accredited investors, which means high-net-worth individuals. The fund only recently began trading on the NEO trading platform, Canada’s newest exchange. Investment advisors can now buy the open-ended Bitcoin fund and allocate units into clients TFSA and RRSP accounts.

The fund allows accredited investors access to Bitcoin without having to worry about the intricacies of buying, storing, and managing the physical asset.


One of the biggest drawbacks is that the fund is only available to accredited investors. Retail investors don’t have direct access to purchase units in the fund.

A second drawback is one that most don’t think about. True, it would be nice to enjoy your Bitcoin gains tax free. On the flip side, however, with your holdings inside a registered account, you are missing out on the opportunity to claim capital losses. These losses are wasted.

Hold Bitcoin itself

Bitcoin is still in its infancy and is still subject to massive price swings. Although it would be nice to protect your gains, it is equally as important to be able to claim your losses. As such, I would suggest holding any fund that tracks cryptos or blockchain technology outside your registered accounts. As for Bitcoin, it’s best to hold the digital currency itself. Although it may be complicated come tax time, the investment products for retail investors are limited in scope.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien has no position in any of the stocks listed and is long Bitcoin. 

More on Tech Stocks

Dollar symbol and Canadian flag on keyboard
Tech Stocks

3 Top Canadian Growth Stocks to Buy in July

Here are three growth stocks you might want to add to your buy list in July.

Read more »

Various Canadian dollars in gray pants pocket
Tech Stocks

2 Ultimate Growth Stocks to Buy Below $50

These under-$50 stocks have multiple growth catalysts that point to a steep recovery.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

This 1 Tech Stock Has Surged 50% in the Last 2 Months: Should You Buy?

While the entire tech sector is in a selloff, one Canadian tech stock has jumped 50% in two months. Is…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

3 Growth Stocks Worth Buying if You Can Handle Volatility

Are you an investor that isn’t scared of a little volatility? Here are three top picks!

Read more »

edit U-turn
Tech Stocks

Can Shopify (TSX:SHOP) and Lightspeed (TSX:LSPD) Recover Before 2023?

Shares of these omnichannel commerce-enabling companies are down over 80%, creating a solid buying opportunity.

Read more »

Tech Stocks

These 3 Cheap Stocks Would Be an Excellent Addition to Your Portfolio

Given their attractive valuation and solid growth potential, these three stocks would be an excellent addition to your portfolio.

Read more »

Growing plant shoots on coins
Tech Stocks

Market Correction: Don’t Miss These TSX Growth Stocks

Long-term investors shouldn’t miss this correction to accumulate top TSX growth stocks at prices well below their highs.

Read more »

Shopping and e-commerce
Tech Stocks

Shopify (TSX:SHOP): Why Did it Fall So Violently in 2022?

The TSX’s tech phenomenon fell sharply in 2022 due to slowing revenue growth, soaring inflation, and rising interest rates.

Read more »