Can You Buy Crypto with Charles Schwab?

No, Charles Schwab does not provide the option to directly purchase cryptocurrencies. Their platform strictly deals with crypto-based derivative products like ETFs, Crypto Trusts, and stocks related to crypto companies such as Coinbase and Microstrategy.

It's advisable to avoid investing in these derivatives due to the associated risks, including custodial and management risks. The recent collapse of Genesis and Grayscale exemplifies these risks. Moreover, purchasing these derivatives is often more expensive than buying the underlying assets like Bitcoin (BTC), Ethereum (ETH), or Solana (SOL).

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How to Buy Bitcoin and Crypto with a Schwab Alternative

The ideal method for buying cryptocurrencies in the U.S., as an alternative to Charles Schwab, is using a FinCEN-regulated exchange in America. Through these platforms, investors can safely deposit USD via Bank/ACH Transfers, Debit and Credit Cards, and more. We favor eToro over popular rivals like Coinbase due to their lower fees, tighter spreads and wider range of assets.

You can get started in minutes with this simple guide:

  1. Visit eToro to sign up and verify your identity.
  2. Select the 'Deposit Funds' button on the bottom left of your screen.
  3. Select the amount of USD you want to deposit and your preferred deposit method (e.g ACH Transfer or Debit/Credit Card).
  4. Complete the USD deposit and use the funds credited to your account to invest in cryptocurrencies.
Charles Schwab Crypto Alternative

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What are the Fees?

The fees to trade crypto stocks, ETFs and other derivative products on Charles Schwab are completely free when it comes to up-front costs. However, Charles Schwab does take a fee in the spread of the buy and sell price of equities and other assets that ranges at around 1%. This is the exact same fee structure as our recommended alternative eToro, however, you can buy real crypto assets on their platform and not just derivatives.

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Is Charles Schwab Crypto-Friendly?

Charles Schwab, less "crypto-friendly" than some brokers, doesn't support direct crypto transactions and has no announced plans for an in-built crypto wallet or services. While it offers investments in crypto-related products like ETFs, trusts, and crypto-company stocks, direct investment and ownership of cryptocurrencies like Bitcoin or Ethereum require a different platform.

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Why are Crypto ETFs and Trusts Risky on Charles Schwab?

Crypto ETFs and trusts on traditional brokerage platforms like Charles Schwab are considered riskier than buying the underlying crypto assets for several reasons:

  1. Complexity: ETFs and trusts are complex financial products that can be difficult for some investors to understand. When you buy the underlying crypto assets directly, you have full control over your investment and a clear understanding of what you own.
  2. Higher fees: ETFs and trusts typically come with higher fees than buying the underlying crypto assets directly. These fees can eat into your returns over time and reduce your overall investment returns.
  3. Lack of control: When you invest in an ETF or trust, you are entrusting the fund manager to make decisions on your behalf. This can lead to a lack of control over your investment and a lack of transparency in the fund's decision-making process.
  4. Counterparty risk: ETFs and trusts involve a counterparty risk, meaning that if the fund manager or the trust issuer goes bankrupt you may lose your investments. This is not the case when you buy the underlying crypto assets directly.

Overall, investing in crypto ETFs and trusts is considered to be riskier than buying the underlying crypto assets directly, because of the added layers of complexity and lack of control. It's important to conduct proper research, consulting with a financial advisor and be aware of the risks before investing in any crypto ETFs & Trusts.

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Bottom Line

In summary, Charles Schwab does not offer direct crypto investments but provides access via complex, expensive and potentially riskier vehicles like ETFs and Crypto Trusts. For direct crypto ownership, we recommend eToro, a FinCEN-licensed US exchange offering a broad asset range and competitive fees. Always conduct thorough research and consult a financial advisor before investing.