How To Invest In Crypto With Td Ameritrade

TD Ameritrade does not offer direct trading in cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. However, the company has been slowly introducing Bitcoin-based offerings and investing in the cryptocurrency exchange ErisX, which is regulated by the Commodity Futures Trading Commission. TD Ameritrade customers can gain exposure to the crypto market through Bitcoin futures contracts and over-the-counter derivatives like the Grayscale Bitcoin Trust. The merger with Charles Schwab, which offers Bitcoin futures and has a director on the board of Coinbase, could also impact its future cryptocurrency offerings.

TD Ameritrade's merger with Charles Schwab and its implications for crypto offerings

TD Ameritrade was acquired by Charles Schwab in 2020, with the integration of the two companies concluding in late 2024. As a result of the merger, TD Ameritrade is no longer accepting new clients. The merger has resulted in some changes to the services offered by both companies, including their crypto offerings.

Prior to the merger, TD Ameritrade had slowly been introducing Bitcoin-based offerings, such as futures contracts, and investing in a new cryptocurrency exchange, ErisX. Through its investment in ErisX, TD Ameritrade planned to offer its customers the ability to buy and sell Bitcoin and other cryptocurrencies on its platform in the future. The company also offered other over-the-counter traded derivatives, such as the Grayscale Bitcoin Trust (GBTC).

Charles Schwab, on the other hand, had previously offered its customers access to Cboe Bitcoin Futures in 2018 but had not provided much guidance on future digital asset offerings. Schwab does not allow bitcoin purchases in IRAs. However, the presence of a Charles Schwab director, Chris Dodds, on the board of Coinbase, one of the world's largest cryptocurrency exchanges, may be a positive indicator for the company's future crypto offerings.

Following the merger, Schwab clients can access crypto offerings from both companies. They can find spot bitcoin and ether ETFs in the Morningstar category "Digital Assets" using Schwab's Fund Finder tool. Additionally, Schwab offers several choices for gaining exposure to the crypto market, although spot trading of cryptocurrency is not currently available. These offerings include cryptocurrency-related ETFs, mutual funds, coin trusts, futures, and stocks.

The merger has also resulted in some challenges and negative feedback from former TD Ameritrade clients, particularly regarding the mobile app and call center experiences. Some users have expressed disappointment with the functionality and ergonomics of the Schwab mobile app, stating that it feels like a "step back into the stone age". Others have noted issues with the migration of data and access, as well as longer wait times for automatic transfers.

How to get crypto exposure on TD Ameritrade

TD Ameritrade does not currently offer direct crypto trading on its platform. However, it does provide different ways to get market exposure to cryptocurrencies. Here are the steps to get crypto exposure on TD Ameritrade:

Over-the-Counter (OTC) Trusts

OTC trusts allow you to trade shares in trusts that hold large pools of cryptocurrency. These can be traded on TD Ameritrade, but it is important to note that they come with high volatility, risks, and fees. OTC trusts are similar to closed-end funds and are traded over the counter.

Mutual Funds and Exchange-Traded Funds (ETFs)

Mutual funds and ETFs provide an opportunity to gain indirect exposure to cryptocurrencies through TD Ameritrade. These funds invest in Bitcoin futures contracts, giving clients a chance to get exposure to the crypto market without directly holding the assets. However, the options are limited, especially if you are looking for funds with a mix of different cryptocurrencies. Additionally, the expense ratios for these funds can be high.

Bitcoin Futures

TD Ameritrade offers Bitcoin futures trading through the CME Group. This allows you to gain exposure to Bitcoin without owning the cryptocurrency directly. Bitcoin futures involve trading using borrowed money, known as margin. While this can provide the advantage of controlling a large position with a small amount of money, it is important to note that the margin requirements for Bitcoin futures are typically higher compared to other markets.

Other Alternatives

If you are seeking to own cryptocurrencies directly, there are alternative platforms to consider, such as eToro, Coinbase, Crypto.com, and Kraken. These platforms offer a wider range of cryptocurrencies and provide features like staking, crypto spending cards, and educational resources for beginners.

TD Ameritrade's investment in the regulated crypto exchange ErisX

TD Ameritrade has been cautious in its approach to the cryptocurrency market, choosing to slowly introduce Bitcoin-based offerings in the form of futures contracts. However, in 2018, the company announced a significant step forward with its investment in the regulated cryptocurrency exchange ErisX. This move signalled TD Ameritrade's intention to offer its customers a wider range of digital asset investment options beyond Bitcoin.

ErisX, founded in 2010, initially focused on futures trading but shifted its attention to digital assets in 2017. TD Ameritrade's investment in the exchange was part of its strategy to bring Bitcoin trading to its customers in the future. The investment also aligned with the company's history of innovation, which includes being the first to enable stock trading over the phone, the first to offer trading over the Internet, and the first to leverage artificial intelligence for automated trading.

Through its investment in ErisX, TD Ameritrade aimed to make digital currency products more accessible to its retail clients. ErisX planned to offer traders access to cryptocurrency spot contracts and futures contracts on a single exchange. This integration would allow TD Ameritrade customers to buy and sell Bitcoin and other cryptocurrencies on its platform.

While the timeline for this integration remains uncertain, the development of ErisX continues. In the meantime, TD Ameritrade has introduced more cryptocurrency-based derivatives, such as Micro Bitcoin futures, providing its customers with alternative ways to gain exposure to the crypto market.

TD Ameritrade's crypto exchange competitors

TD Ameritrade has been slow to enter the cryptocurrency market, instead focusing on introducing Bitcoin-based offerings in the form of futures and investing in a new cryptocurrency exchange. The company has announced that it will enable its customers to buy and sell Bitcoin and other cryptocurrencies on its platform in the future through its investment in the regulated cryptocurrency exchange ErisX.

In the meantime, here are some of TD Ameritrade's top competitors in the crypto exchange space:

SoFi Invest

SoFi Invest is a beginner-friendly platform that offers $0 commissions on stocks and a robo-advisor with no management fees. While it falls short in the number of investment options compared to TD Ameritrade, it does offer exposure to cryptocurrency, allowing investors to buy and sell Bitcoin, Ethereum, and over 20 other coins with just $10. SoFi also offers fractional share trading and no-fee automated investing.

Robinhood

Robinhood is a user-friendly platform known for its commission-free stocks, ETFs, options, and crypto. It offers instant deposits and fractional-share trading, allowing investors to buy stocks and crypto with as little as $1. Robinhood Gold, available for $5 per month, provides additional features such as margin investing and more in-depth research. However, it may not be suitable for active traders as it lacks sophisticated research tools and access to certain securities.

Fidelity Investments

Fidelity Investments is one of the largest brokers in the US, offering fractional share trading, robust research tools, and no-minimum and expense-ratio-free index funds. Fidelity Go, the firm's robo-advisor, has a low management fee of $10 for accounts holding less than $10,000. While Fidelity does not offer direct access to cryptocurrency, it provides a wide range of investment options and excellent research capabilities.

Interactive Brokers (IB)

Interactive Brokers is a solid choice for advanced traders and investors looking to access global markets and expand their portfolios. It offers a variety of advanced research tools and investment options, allowing users to place more than 100 different order types and access complex trading algorithms. However, some features may be overwhelming for beginners, and the fee structure for its Pro level can be complex.

OANDA

OANDA is a company that specializes in online foreign exchange (forex) and cryptocurrency trading. It offers platforms for trading various currency pairs and cryptocurrencies.

The future of TD Ameritrade and Bitcoin

TD Ameritrade has been slow to introduce cryptocurrency trading to its platform, but it has been steadily adding Bitcoin-based offerings in the form of futures while also investing in a new cryptocurrency exchange. The company's merger with Charles Schwab could also have significant implications for its cryptocurrency offerings in the future.

Currently, TD Ameritrade does not offer Bitcoin trading on its platform. However, the company has announced that its customers will be able to buy and sell Bitcoin and other cryptocurrencies in the future through its investment in the regulated cryptocurrency exchange ErisX. In the meantime, TD Ameritrade customers can gain exposure to Bitcoin by purchasing Bitcoin futures contracts or investing in over-the-counter traded derivatives such as the Grayscale Bitcoin Trust (GBTC).

The implications for digital assets on the new company formed by the merger of TD Ameritrade and Charles Schwab are not yet clear. Schwab had previously opened its customers to Cboe Bitcoin Futures in 2018 but had not given much guidance on future digital asset offerings. One positive indicator is that a Charles Schwab director, Chris Dodds, sits on the board of Coinbase, one of the world's largest cryptocurrency exchanges.

As the development of ErisX continues, it is likely that the crypto exchange will eventually integrate directly with TD Ameritrade and its customer base, giving them an easy way to purchase cryptocurrencies, including Bitcoin. However, without a timeline for this integration, it could be years away.

In the meantime, TD Ameritrade customers can gain exposure to Bitcoin through the introduction of more cryptocurrency-based derivatives, such as a Bitcoin ETF. The company already offers Bitcoin futures and over-the-counter derivatives, so it is unlikely to restrict its users from accessing any new such products.

As TD Ameritrade continues to develop its digital asset investment programs, it will provide updates on its progress toward offering cryptocurrency trading to its customers.

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