Cryptocurrencies are constantly in the financial news. This situation shapes economic discussions. In this way, a new trend begins to show itself. This method differs from traditional gift -giving habits.
Instead of old gift cards and cash, it offers the recipient an asset that has the potential to gain value. In this guide, we will explain the cryptocurrency gifting process and how to gift cryptocurrency. We will discuss the methods, regulatory requirements and possible implications of this process
What Are the Main Ways to Gift Crypto?
Before you start gifting cryptocurrency, it is important to learn how you can transfer these assets to the recipient.
There are several options available. If you are thinking about how to gift cryptocurrency in a simple way, you need to have the recipient’s crypto wallet address. You can then use this address to transfer the relevant amount from your own wallet.
All other options have their advantages and disadvantages. These may vary according to various factors. Now, let’s examine these options in detail.
Through an Exchange Platform
The easiest way to gift your cryptos is through an exchange platform. Crypto exchanges help you transfer cryptos from your wallet directly to the recipient’s wallet.
For the transaction to go smoothly, the recipient must have an account on the same exchange platform as you.
The process of sending crypto through the exchange is extremely simple. First, log in to your exchange platform.
After accessing your crypto wallet, select the gifting option. Next, add the details of the person you want to send crypto to.
The required information may vary depending on the platform. However, as a minimum, you will need to know the recipient’s wallet address. In the last step, the transaction will be verified and the funds will be transferred.
Giving Gift Cards
Everyone has received a gift card at least once in their life. The cards used to gift cryptocurrency are no different from traditional gift cards.
Crypto gift cards are available in digital and physical form. They function like traditional gift cards. However, they are loaded with cryptocurrency.
Recipients can transfer this crypto to their own wallets. They can use it for online shopping. To prepare a gift card, first select your preferred platform.
Create an account, buy and verify the card. Once your loved ones receive the card, they can redeem the gift card by creating an account on the same platform.
Setting up a Software Wallet
Another answer to the question of how to gift cryptocurrency is software wallets. If you want full control and access when gifting cryptocurrency, set up a software wallet. This process requires some technological knowledge.
As a first step, you should download the software wallet and create an account. The most important step is to remember the key phrase required for wallet recovery. This consists of 12 and 24 random words.
After setting up the wallet, you can transfer funds to this wallet. The recipient can access these funds by downloading the software and entering the key phrase. This method offers your loved ones complete control over crypto assets.
Are Taxes Imposed When Gifting Cryptocurrency?
In the United States, cryptocurrency is generally not taxed when gifted. This issue is important for investors who are thinking about how to gift cryptocurrency. However, there are certain amount limitations that you should consider before choosing these tokens as gifts.
As of 2024, the maximum amount you can gift tax-free is $18,000. If your gift exceeds this amount, you will need to file Form 709 and pay the associated fees.
If the recipient of the cryptocurrency sells the crypto during the year of the gift, it is considered a short-term capital gain. It is taxed at normal income tax rates.
If it is sold after one year, this is considered a long-term gain. Lower capital gains tax rates apply.
It is important to remember that crypto values can change rapidly. Therefore, it is critical to record the purchase price and its value at the time of transfer.
Not having this information may require the recipient of the gift to use the current market value. This may increase the tax burden if a profit is realised from the sale.
How Do You Choose Which Cryptocurrency to Gift?
There are thousands of different cryptocurrencies available today, and giving one as a gift is an important decision.
If the recipient doesn’t specify a particular token, it’s best to choose one of the most established coins. These are Bitcoin, Ethereum and Solana.
Cryptocurrencies are a volatile investment. Therefore, investing in the most reliable cryptocurrencies can reduce the risks.
However, it is important to research current market trends to properly assess the pros and cons of each coin before making a decision.
Conclusion
The question of how to give cryptocurrency as a gift has become popular with increasing interest. This method is recognised as an innovative and valuable idea.
Users can choose their preferred cryptocurrency through various methods. These methods include gift cards, exchanges, peer-to-peer payment applications, software wallets, paper wallets and hardware wallets.
They can gift this unit to their family and friends as an investment. Before giving this gift, it is important to choose the method that best suits the recipient’s level of knowledge about cryptocurrency.
Also, the currency and the amount of currency to be gifted should be carefully determined. It is also important to consider the tax implications. It is also important to accurately record the purchase price and transfer value of the crypto gift.
This information will help the recipient manage their tax responsibilities if they sell the cryptocurrency. If you make these decisions carefully and consciously, you will give a gift that will increase the recipient’s interest in the crypto world. This will be a gift beyond its material value.
Frequently Asked Questions
Can I transfer crypto as a gift?
Yes, you can transfer some of your crypto as a gift to a loved one using exchanges, giftcars and peer-to-peer payment applications.
How to set up a crypto wallet as a gift?
First, download your preferred software wallet. Create an account and store the backup statement securely. Next, add the funds you want to give. Share access details with the recipient.
Do I have to pay taxes when gifting cryptocurrency?
In the US, you generally don’t have to pay taxes as long as the amount of crypto gifted is under $18,000.
How much cryptocurrency can I receive as a gift?
There is no limit to the amount of crypto a person can receive as a gift. However, if the amount exceeds $18,000 and they live in the US, they must file a gift tax return.
How do I use a cryptocurrency gift card?
To redeem a cryptocurrency gift card, redeem it by entering the card’s code on the relevant platform’s website and app. The redeemed crypto can then be transferred to your wallet and used for online purchases.