‘Tis the Season To Gift Crypto: Taxes and More Variables You Should Consider Before You Commit

Gold bitcoin decoration on christmas tree stock photo
Diy13 / iStock.com

‘Tis the season for crypto gifting, especially for those who are looking for a last-minute gift or are having trouble finding the perfect holiday present due to supply chain disruptions, lack of ideas or time.

See: What Is the Next Big Cryptocurrency To Explode in 2022?
Find: Why Stocks Are the Perfect Gift for the Kid Who Has Everything

A recent BlockFi survey showed that one in 10 respondents plan to gift crypto for the 2021 “HODLday.” Bitcoin reigns supreme as the crypto of choice for gifting and receiving at 75%. Meanwhile, Dogecoin and Ethereum coming in as second and third, respectively, the survey noted.

Several trading platforms make it very easy to buy and give cryptos. Coinbase, for example, underscores on its website that a crypto gift has the potential to increase in value over time, noting, however, that “it also has the potential to decrease in value,” and that it’s also educational: “Help friends and family learn crypto. With their gift, they can begin trading, HODLing, and using crypto,” Coinbase promoted.

Trade Bitcoin and other cryptos in 3 minutes.

  • Join the crypto exchange who has had industry-leading security from day one.
  • A simple, secure way to buy and sell cryptocurrency
  • Sign up for Gemini and get $7 in ETH

Users can send, sign and personalize gifts from the Coinbase app, by selecting a recipient’s email (who doesn’t need to have a Coinbase account), picking a crypto (Coinbase said users won’t be charged any fees to send gift) and finally, picking a digital card featuring a piece of art from an up-and-coming artist.

Robinhood also launched its Crypto Gifts feature on Dec. 22, which enabled users to customize and send a crypto gift from the Robinhood app. The new feature allows gifting one of 7 cryptos with a unique design and personal message, according to a blog post. In addition, crypto gifts are 0% commission.

Building Wealth

Related: All I Got For the Holidays Was an NFT. Now What?

The process is also simple, as users can send as little as $1 worth of crypto directly to the recipient by sharing a link via email or text.

“Once a gift is sent, the recipient has 14 days to accept their new crypto gift. If they don’t, you won’t be charged (but you’ll still get bragging rights that you gave out crypto for the holidays.) If the giftee is a Robinhood customer, they will simply be redirected to the app to claim the gift. If they are not, they can sign up for Robinhood and then claim it,” according to the blog post.

However, while advantages to gifting cryptos are legion, gift givers should take into consideration several aspects, chief among them potential tax implications.

Time explained that as long as you’re giving less than $15,000 worth of crypto, it falls under the 2021 gift tax allowance. That means you won’t have to worry about any tax implications that come with the gift.

“If you give me crypto that is worth $30,000, then the difference between 15,000 and 30,000 is taxable as a gift, and is taxable to you as the person who’s giving it,” Chris Chen, a financial advisor with Insight Financial Strategists, told Time.

The Year in Review: Shiba Inu and 9 More of the Biggest Hits in Crypto for 2021
Consider: 12% of Americans Don’t Plan To Spend Anything on Holiday Gifts — How To Tactfully Opt Out

In addition, recipients may have to pay taxes on their crypto in the future as the IRS treats virtual cryptocurrencies like “property” for tax purposes, similar to other assets like stocks or gold. “It depends on the crypto’s capital gains or losses when the gift recipient sells or transfers it — basically, how much value their holdings gained or lost in a given period,” according to Time.

And of course, another potential downside is the giftee’s lack of interest or knowledge in cryptos.

More From GOBankingRates

About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

Best Bank Accounts of July 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.