It can—but only if redeeming CoinShares Bitcoin and Ether ETF (NASDAQ: BTF) shares produces a taxable gain that raises your income under the federal Social Security benefits formula. CoinShares Asset Management (US) announced that BTF and the CoinShares Altcoins ETF (DIME) are expected to liquidate on or around October 21, 2026. The sponsor says shareholders may sell through the end of trading on October 20; check CoinShares’ liquidation notice for current details.
How the liquidation affects a BTF shareholder
If you still hold BTF when it liquidates, CoinShares says you will receive cash based on the net asset value (NAV) of your shares after the funds discharge or provide for charges, taxes, expenses and liabilities. The sponsor says shareholders generally recognize a capital gain or loss on redemption. The amount depends on your tax basis and the value used for the redemption; the notice does not establish any individual holder’s gain.
A gain may affect more than the capital-gains line on a federal return. The Social Security benefits calculation counts capital gains among other income. A realized gain could therefore increase the portion of benefits included in taxable income, depending on your full tax situation.
How capital gains enter the Social Security calculation
The IRS calculation begins with half of your Social Security benefits, then adds other income and tax-exempt interest. That total is compared with thresholds that depend on filing status. The calculation determines how much of your benefits is included in taxable income; it does not set your tax rate.
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In its 2025 Publication 915 guidance, the IRS gives these amounts:
| Filing status | Base amount | Amount above which up to 85% of benefits may be taxable |
|---|---|---|
| Single | $25,000 | $34,000 |
| Married filing jointly | $32,000 | $44,000 |
These are 2025 tax-year figures from IRS Publication 915, not confirmed thresholds for a 2026 return. Check the IRS instructions for the tax year in which you report the disposition. “Up to 85%” describes the maximum share of benefits that may be included in taxable income, not an 85% tax rate.
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What an ETF gain might change—and what it does not prove
In a hypothetical example, 24/7 Wall St. describes a single retiree receiving $30,000 a year in Social Security and taking $15,000 from an IRA. Its example says $2,500 of benefits is taxable before a hypothetical $20,000 ETF gain and $18,100 afterward. Those are figures from that publication’s illustration, not a result that applies to every BTF holder or a calculation independently established by the IRS.
Your result depends on your filing status, benefit amount, other income, tax-exempt interest, basis, and any relevant losses or carryovers. Use the applicable IRS worksheet with your own figures; the 2025 Publication 915 worksheet should not be treated as a confirmed worksheet for a 2026 return.
Selling before liquidation versus receiving the cash redemption
CoinShares identifies two practical routes: sell BTF shares on the exchange by the announced final trading day, or hold through liquidation and receive the fund’s cash redemption. Selling earlier does not, by itself, make a taxable-account sale tax-free. A sale or redemption in a taxable account can produce a capital gain or loss; the timing and amount depend on the transaction and your basis.
| Consideration | Sell on exchange by October 20, 2026 | Hold through liquidation |
|---|---|---|
| Disposition timing | When your exchange sale executes. | At the fund’s cash redemption, expected on or around October 21, 2026. |
| Price or value | Market execution price. | Cash based on NAV after charges, taxes, expenses and liabilities are addressed. |
| Control over timing | You choose whether and when to place a sale before the stated deadline. | The fund’s liquidation schedule determines when the redemption occurs. |
| Costs and tax outcome | Brokerage costs and gain or loss depend on your transaction and circumstances. | The notice does not quantify final expenses or any holder’s gain or loss. |
The available information does not establish which route will be financially preferable for a particular investor. Check the sponsor notice for any date changes and redemption details before acting.
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What to check before deciding
- Account type: Determine whether your BTF shares are in a taxable account or a retirement account. The tax consequences depend on the account and transaction.
- Basis and estimated result: Compare your basis with the amount you expect to receive or the price available in a sale, and estimate whether the disposition would realize a gain or loss.
- Other income and filing status: Gather your expected income and Social Security benefits, including tax-exempt interest, to use in the relevant IRS worksheet.
- Losses and carryovers: Check whether capital losses or carryovers apply to your circumstances.
- Current fund details: Review the CoinShares notice for the current deadline, liquidation timing and redemption terms.
The sponsor’s statement that shareholders generally recognize a gain or loss describes the redemption in general terms; it is not an individual tax calculation. The discussion here concerns federal Social Security taxation. State tax consequences are not established by the cited information.
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