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18 April 2021

Crypto can be lucrative, but make sure you’re ready for the taxman

Crypto can be lucrative, but make sure you’re ready for the taxman


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Hindsight is 20/20, but when money is on the line, being prepared can give investors better foresight.

Yet it is crucial for investors in the United States to understand the digital asset tax regulations because, in some cases, it may mean the difference between prosperity and five years in prison with fines up to $250,000.

Many investors think of Bitcoin as a digital currency, like fiat currencies used regularly by consumers to buy goods.

It’s difficult to pinpoint why Bitcoin is classified differently from fiat currencies, but precedent in how Bitcoin is utilized by investors may tell us the answer.

While some crypto hedge funds are considered risky due to questions about crypto-market liquidity, they can be the better route to invest instead of buying individual units of Bitcoin.

According to Big Four audit firm PricewaterhouseCoopers, assets under management with crypto hedge funds rose from $1 billion in value in 2018 to over $2 billion in value in 2019.

Compared to traditional assets, when onboarding investors for crypto assets, it’s a whole different ball game?

Unlike traditional assets, it’s imperative that digital asset hedge funds ask deeper questions about tax considerations?

When the taxman comes knocking, it’s better to be safe than sorry and know the regulations; otherwise, the consequences could be much graver

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cointelegraph.com
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