Bitcoin Forum

Do any ETFs offer conversion from a private wallet to their ETF that is not taxed upon conversion?

As an individual small investor, you can not buy Bitcoin Spot ETFs directly. You will have to work, sign contract with middle companies to buy Bitcoin Spot ETFs.

Those companies that submitted Bitcoin Spot ETF applications and got approvals, definitely have to follow existing strict laws and regulations in the USA. We know that country is very strict against Money laundering through cryptocurrencies.

Those companies will not allow you to invest to their business privately and you will have to do KYC to join.

Hmm, not my experience at all.  I just logged into Fidelity and was able to purchase FBTC just as easy as anything else.

Maybe you misunderstood my question.  I want to purchase BTC ETF shares equivalent in value to an amount of BTC that I would send them from my private wallet, without selling my private wallet BTC first (thereby creating a taxable event).  I would still be the owner (so no tax event) but the ETF issuer would now be the custodian.

It is certainly technically possible, but I fear that the ETF provider will only even consider it for a larger number of Bitcoin (probably at least 3-digit). This would create a considerable amount of work for the ETF provider, which they would certainly not take on for a handful of Bitcoin. However, you could simply contact Fidelity support here and you are guaranteed to get a statement on how realistic your plan is.

I would also not be sure whether the transfer of the wallet to the provider does not already constitute a tax-relevant event. This would have to be cross-checked by a tax consultant with crypto expertise.

You cannot do that, because ETFs are based on trusting them to buy Bitcoin, and you do not have experience or trust that you can keep Bitcoin safely, so you need to sell your bitcoin first but why do you do that? Bitcoin can be an investment and you can use it as money to pay, while ETFs are stocks.

If the sale makes you a profit, it is subject to tax, so wait until the price of Bitcoin rises, sell it and buy shares when the price falls again.

This is not tax advice, you should check it yourself.