- Ark Invest’s Cathie Wood says bitcoin investors shouldn’t transact with the coin until the tax code is changed.
- At the moment, investors need to pay capital gains taxes when they transact with bitcoin or convert it to fiat money.
- Wood’s comments come just days after Elon Musk announced it’s possible to buy a Tesla using bitcoin.
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Despite major companies like Tesla now allowing customers to pay in bitcoin, Cathie Wood has advised cryptocurrency investors against using the cryptocurrency as a payment.
During a Thursday webcast hosted by Cboe, the Ark Invest founder cautioned investors who’ve made profits from bitcoin’s rally against transacting with their coin, as they may have to face massive taxes.
“The IRS has something to say about this, so if you have huge gains in your bitcoin, I don’t think I would bear much in the way of transactions until we get maybe some changes on the tax front,” Wood said.
At the moment, the IRS treats bitcoin and other cryptocurrencies as “property,” like stocks and bonds – not a currency. When investors sell bitcoin for fiat money or use it to purchase a good, they face capital gains taxes. The amount of a tax a person will have to pay on a transaction involving bitcoin depends on how long they’ve had the coin and how much they’ve returned on their investment.
Wood’s comments come just two days after Elon Musk announced that it’s possible to buy a Tesla vehicle in the US with bitcoin. While bitcoin was originally conceived by its founder as a “peer-to-peer electronic cash system,” some crypto enthusiasts-like Wood-view bitcoin as more of a store of value asset, akin to “digital gold.”
Bitcoin fell on Thursday by as much as 6.7%, to $US50,440.17 ($66,450), as retail-investor interest slipped and the options market triggered volatility. The coin is still up roughly 672% over the past year.