What Are the Potential Tax Implications of Investing in a Synthetic ETF versus a Physically-Backed One?

Tax implications can differ based on the underlying assets and the fund's structure. For a physically-backed crypto ETF, the tax treatment is generally based on the underlying asset (e.g. commodity tax rates for Bitcoin).

A synthetic ETF's swap structure may lead to different tax treatment, potentially offering more favorable capital gains rates depending on the jurisdiction and specific derivative used.