I am trading shares and Crypto currencies on the popular online trading platform eToro, which used to offer only crypto currencies as CFDs. It has now commenced selling the actual underlying crypto assets instead, and has recently decided to impose overnight fees on the CFD positions if you dont convert them to underlying assets, and they have requested that I do so before 27 Jan. To convert them from CFD to underlying asset you have to first close the CFD position and then buy the underlying asset, and if done so within a ten-minute window, they will reimburse the spread fee.
Unfortunately, my CFD positions are currently at a loss
and thus closing them will result in me losing money, however as the cost of
buying the underlying crypto asset is lower, buying back the asset at the lower
price would evidently be proportionate thus with the spread reimbursed the
number of units would be the same and I would not be at a further loss (example
below). Would this constitute a wash sale?
To exemplify:
If when I invested $1000 in a Bitcoin CFD the price per unit was $2, I would acquire 500 units. If the price however now is $1 per unit, my 500 unit position would be valued at $500 thus I am at a loss of $500. If I was to convert this CFD to underlying Crypto asset by closing the CFD I would receive $500 from the position closure, and then would buy $500 worth of the actual asset which at $1 per unit would grant me the same number of units as I originally purchased, 500.
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