With the arrival of this brand new option known as bitcoin, traditional presents have taken a back seat. There is now growing popularity in crypto investments to boost investor wealth.
As per a recent survey, one in ten people presented crypto in the recent holiday season. With the rising prominence of these digital currencies, it has also become a cakewalk for the masses to buy these digital assets through platforms like Coingate.
According to stats, 26% of people in Australia sent crypto as gifts during the festival season in 2021. Americans are no less and send 10% of these. It’s clear that we all have entered the digital state where dealing in crypto is no biggie, and it’s accepted globally.
However, gifting crypto envisages a chunk of risks – it might fetch you greater returns or might not! So whether you gave it as a gift or received it, we highlight a few points you should know about crypto.
Let’s get started!
1. Volatility of crypto-currency
Crypto is a digital currency and is volatile. It’s a market of high-risk, high-return. It has the potential to make you earn a massive chunk of growth but also has a chance to leave nothing for you but experience. For instance, it started the year 2021 with $30,000 and reached over $68000 in November in 2021. Likewise, Ethereum rose from $737 to $4000 in a day, and both of them lost 15% of value till the afternoon.
Witnessing the volatility of these digital currencies, you need to ensure that when you receive it as a gift you understand the functionality of cryptocurrency and are well-versed in owning and investing in these.
2. Transaction costs associated
If you have received cryptocurrencies, you should know that it constitutes transaction costs associated with them. In addition, whether you’re a buyer or seller, you should know that it includes various types of charges varying from currencies you trade with, and you should know why and how much different exchange platforms charge you.
3. Tax implications
Talking about the tax implications crypto encompasses, if you’re gifting the currency less than $15000, there is no tax liability for such a receiver as it comes under gift tax allowance. Moreover, if you’re giving it worth $30,000 worth of cryptocurrency instead of $15,000. In this scenario, the person gifting the cryptocurrency is required to pay taxes on the gift since it exceeds the annual gift tax exclusion. The good news here is that most, if not all, tax platforms have completely automated this process. It doesn’t matter if you file your tax return online for free like most folks, or sit down with a tax professional, the process should be fairly simple.
It’s a matter of future regulations that you might need to pay taxes on your crypto whether you keep it or sell it immediately. All these things rest upon crypto’s capital losses and gains; when the gift receiver sells it, that is basically how much the currency gained or lost during a given period.
4. Buying methods
There are two alternatives to deal with crypto. Either you can send it directly to someone through any exchange platform from one crypto wallet to another, or you can buy gift cards. There are various platforms like Coingate where you can set up a crypto wallet, execute transactions, and even buy gift cards. All you need is to ascertain the platforms you need to receive these cryptocurrencies successfully.
We hope that the above considerations will help you make better investment decisions for your crypto gift. However, it’s always advisable to do your research and mitigate the associated risks every time.