CoinShares BTF Liquidation Set to Boost Taxable Social Security Benefits

CoinShares Bitcoin and Ether ETF (BTF) will liquidate on October 21, 2026, resulting in a forced cash redemption for shareholders in brokerage accounts. This event can lead to a significant increase in taxable income, potentially affecting Social Security benefits. For a retiree holding BTF in a taxable brokerage account, the liquidation can result in a capital gain or loss, which may pull more of their Social Security benefit into taxable income. The forced gain can even make up to 85 cents of benefits taxable for each dollar of gain.

The IRS uses combined income to determine how much of a retiree's Social Security benefits are taxable. For a single taxpayer, benefits start becoming taxable above $25,000. Above $34,000, up to 85% of benefits can be taxed. The liquidation of BTF will add a $20,000 gain to the retiree's income, increasing their combined income to $50,000. This will result in a taxable portion of their benefits rising to $18,100, adding $15,600 in extra taxable income beyond the gain itself.

Investors can sell their shares before the liquidation date, but this will still result in a taxable sale in a brokerage account. To limit the tax damage, shareholders should check their cost basis, account type, and capital losses before October 20. A retiree with a low cost basis may see a larger tax bill than one with a higher cost basis.