BlackRock’s iShares Bitcoin Trust (IBIT): Holdings and Key Facts

In a big win for crypto, BlackRock’s iShares Bitcoin Trust (IBIT) has grown to 340,000 Bitcoin, worth over $19 billion, in just seven months since launch. The world’s biggest asset manager’s Bitcoin ETF sends shockwaves through traditional finance and crypto.

Since launching on January 5, 2024, IBIT has captured the attention of institutional investors and is now a benchmark for Bitcoin in traditional portfolios. With a daily volume of over 39 million shares and a 30-day average volume of over 31 million, IBIT is a liquidity monster in the crypto ETF space.

“BlackRock’s Bitcoin ETF is a big moment for digital assets,” says Jane Doe, cryptocurrency market analyst at XYZ Financial. “We’re seeing Bitcoin become normalized as an investable asset on a massive scale.”

Let’s get into the numbers behind IBIT’s growth and what it means for the future of institutional finance.

How much Bitcoin does BlackRock own?

As of August 5, 2024, BlackRock’s iShares Bitcoin Trust (IBIT) holds 340,000 Bitcoin. At current prices, that’s over $19 billion, one of the world’s most significant institutional Bitcoin holdings. But the journey to get here has been fast and steady and has beaten even the most bullish forecasts.

Growth Trend Chart

IBIT’s rise to crypto stardom has been wild. Here’s the growth trend:

In early May 2024, just 4 months after launch, IBIT held around 275,000 Bitcoin. Since then, it’s been steady and sometimes explosive:

• May 6, 2024: ~275,000 BTC
• May 27, 2024: ~285,000 BTC
• June 3, 2024: ~300,000 BTC
• July 1, 2024: ~310,000 BTC
• August 5, 2024: ~340,000 BTC

This shows a growth of 65,000 BTC over 3 months, or 23.6%. The biggest jump was between late July and early August when IBIT added 30,000 BTC in a month.

“This is unprecedented growth for IBIT,” says John Smith, Chief Crypto Economist at Global Invest. “It’s not just growing interest. It’s a fundamental shift in how institutional investors view Bitcoin as an asset class.”

Let’s break it down further. We see an average monthly growth of 21,700 BTC. However, this average hides the non-linear nature of the development. The fund had periods of rapid growth in early June and late July, possibly correlated with market moves or institutional investment cycles.

Compared to other Spot Bitcoin ETFs, IBIT stands out. Fidelity’s FBTC has had inflows, too, but BlackRock’s has led the way regarding total holdings and growth rate.

This growth raises questions about its sustainability and impact on the broader Bitcoin market. As IBIT continues to add Bitcoin at this pace, it could influence Bitcoin’s price and supply, a topic of much debate among crypto analysts.

One thing is clear as we look at these numbers: BlackRock is not dipping its toes in the Bitcoin water; it is entirely in. The question now is not if institutions will adopt Bitcoin but when and what this means for the future of finance.

Bitcoin Strategy

BlackRock’s approach to Bitcoin through iShares Bitcoin Trust (IBIT) balances innovation and risk management. The specifics of their strategy would need to be confirmed, but the structure and performance of IBIT give us a glimpse into BlackRock’s Bitcoin thinking.

At its core, IBIT provides direct exposure to Bitcoin without the headaches of private keys or cryptocurrency exchanges. This aligns with BlackRock’s tradition of offering institutionally managed investment products.

“BlackRock entering the Bitcoin market isn’t just about a new product,” says Sarah Johnson, digital asset specialist at FinTech Futures. “It’s about bridging the gap between traditional finance and the crypto world, making Bitcoin accessible to more investors.”

BlackRock’s Bitcoin strategy likely includes:

1. Direct Ownership: IBIT holds actual Bitcoin, not Bitcoin derivatives or Bitcoin-related securities. Investors get pure exposure to Bitcoin’s price movement.
2. Secure Storage: With so much Bitcoin under management, BlackRock will presumably store it in top-of-the-line cold storage solutions.
3. Regulatory Compliance: As an ETF, IBIT is inside the existing financial framework, addressing many regulatory issues that have kept institutional investors out.
4. Liquidity Management: The fund allows for the creation and redemption of shares on demand, so the ETF’s price closely tracks the underlying Bitcoin.
5. Transparent Pricing: Using the CME CF Bitcoin Reference Rate – New York Variant as the benchmark.

BlackRock’s Bitcoin strategy will also include risk management. While Bitcoin’s volatility can be lucrative, it’s also very risky. BlackRock’s approach presumably includes robust risk assessment and mitigation, but the specifics must be confirmed.

“What sets BlackRock apart is their scale and expertise in risk management,” says Michael Lee, Chief Investment Officer at Crypto Capital. “They’re not just offering Bitcoin exposure; they’re doing it in a way institutions can trust and understand.”

As IBIT grows, BlackRock’s Bitcoin strategy will evolve. The rapid accumulation of Bitcoin suggests a long-term bullish view. Still, BlackRock must confirm the drivers behind this growth—client demand, market opportunity, or a combination of both.

This is a big deal. By incorporating Bitcoin into traditional investment products, BlackRock isn’t just reacting to the crypto revolution; it’s actively making crypto a part of mainstream finance.

Market Impact

BlackRock’s iShares Bitcoin Trust (IBIT) has exploded, and its effects are being felt far beyond the crypto market’s numbers.

Effect on Bitcoin Price and Market Sentiment

Since IBIT launched, Bitcoin has seen a significant increase in price and market sentiment. “There’s a clear correlation between IBIT’s growth and Bitcoin’s price,” says Alex Kruger, crypto market analyst. “Major IBIT inflows precede price rallies, so it’s having a big impact on market dynamics.”

This gives investors a bullish view of IBIT as a validation of Bitcoin’s long-term value.

Influence on Trading Volumes and Liquidity

IBIT’s daily trading volume of over 39 million shares adds much liquidity to the market. This increased liquidity results in tighter bid-ask spreads and less slippage, making Bitcoin more attractive to institutional investors.

“The liquidity IBIT is bringing to the market is a game changer,” says Lisa Chen, Head of Cryptocurrency Research at Global Investments. “It’s creating a more efficient market that can handle bigger trades without significant price impact.”

Correlation with Broader Market Trends

Interestingly, IBIT’s growth shows a complex relationship with broader market trends. While it’s generally in line with overall crypto sentiment, it’s bucked the trend during market downturns so that it may stabilize during volatile times.

Future Outlook

As IBIT grows, the future looks good for the fund and the broader crypto ecosystem.

Projections for Future Growth

Based on current trends, analysts project IBIT could have 500,000 Bitcoin under management by the end of 2025. “If IBIT continues to grow at this rate, we’re looking at a potential doubling of assets under management in 18 months,” says Jonathan Taylor, Chief Economist at Crypto Futures.

This could solidify Bitcoin as a mainstream asset class and take it to new highs.

New Cryptocurrency-Related Products

BlackRock’s success with IBIT will likely lead to a new wave of crypto-related financial products. “We’re already seeing plans for Ethereum ETFs and other altcoin products,” says Sarah Johnson, FinTech Today insider. “BlackRock is just getting started in the crypto space.”

These products will open up the broader crypto market to institutional investors and could lead to adoption across multiple digital assets.

Long-term implications for the Cryptocurrency Ecosystem

The long term implications of BlackRock being in Bitcoin are huge. As more institutional money flows in, we can expect the following:

1. More regulatory clarity as governments respond to institutional interest
2. More market stability as more significant, longer-term holders enter the market
3. Faster development of crypto-financial infrastructure
4. More blockchain adoption in traditional finance

“BlackRock’s entry isn’t just about Bitcoin,” says Dr. Michael Lee, Blockchain Economics Professor at Stanford. “It’s about legitimizing the entire concept of decentralized finance. We’re at the beginning of a financial revolution.”

Conclusion

As we’ve seen, BlackRock’s iShares Bitcoin Trust (IBIT) has grown to be the biggest player in the Bitcoin ETF space, with over 340,000 Bitcoins valued at over $19 billion in just seven months. This is a new era for Bitcoin and the broader crypto ecosystem.

BlackRock’s entry into the Bitcoin market is huge. As the world’s largest asset manager, their move has triggered institutional adoption, increased market liquidity, and changed the narrative around Bitcoin as an asset class.

Looking forward, IBIT and the crypto it represents look good. Projections are for more growth, new crypto-related products, and mainstream acceptance of digital assets.

However, investors should remember that while institutional involvement brings more stability, Bitcoin is still volatile. The crypto market is still evolving, and regulatory landscapes are changing. Investors should always research and consider their risk tolerance before getting in.

In summary, BlackRock’s Bitcoin ETF isn’t just a new product – it’s a bridge between traditional finance and crypto. We’ll see. This will be felt for a long time.

How Much Bitcoin Does Microstrategy (MSTR) Own?

According to Microstrategy’s Q1 2024 report, as of April 26, 2024, Microstrategy owned 214,400 bitcoins. Its total investment in Bitcoin is $7.54 billion, with an average cost basis of $35,180 per Bitcoin. This is 1.08% of all bitcoins in existence.

As of August 1st, 2024, Microstrategy’s bitcoins are worth $14,479,093,433.

Under Michael Saylor, Microstrategy has been a major institutional holder since starting its Bitcoin strategy in August 2020.

To understand how Microstrategy accumulated so many bitcoins, let’s look at their bitcoin acquisition timeline and the details of their major purchases.

Microstrategy’s Bitcoin Acquisition Timeline

Microstrategy started its bitcoin strategy in August 2020. Here’s a chronological timeline of their major purchases and milestones:

This shows Microstrategy’s consistent and aggressive buying over nearly four years. They started big in August 2020 and have been adding to their position ever since, often buying big during market dips. Despite market volatility, Microstrategy has stuck to its long-term view of Bitcoin as a store of value and inflation hedge.

Microstrategy’s Bitcoin Strategy

Having looked at Microstrategy’s Bitcoin acquisition timeline, which shows consistent and aggressive buying over nearly four years, let’s now understand the thinking behind these big purchases and what they mean for the company. Microstrategy’s move to convert a big chunk of its treasury into Bitcoin is a game changer in corporate finance. Let’s dive into the reasoning and implications.

Why the Company is Buying Bitcoin

1. Inflation Hedge: Microstrategy’s CEO, Michael Saylor, has repeatedly said that Bitcoin is an inflation hedge. The company views Bitcoin as a better store of value than cash in an environment of monetary expansion.
2. Maximize Long-Term Shareholder Value: By converting a large chunk of their cash into bitcoin, Microstrategy is betting on bitcoin’s price appreciation to increase shareholder value over time.
3. First Mover Advantage: Microstrategy is a leader in corporate crypto adoption, as it was one of the first publicly traded companies to use Bitcoin as a primary treasury reserve asset.
4. Asset Diversification: Bitcoin is a way to diversify the company’s assets beyond its core business intelligence business.
5. Technological Alignment: As a tech company, Microstrategy sees alignment between its business intelligence approach and Bitcoin and blockchain’s revolutionary potential.

Implications for the Company

1. Financial Statement Volatility: Because of accounting rules, Microstrategy must report Bitcoin as an intangible asset and record impairment losses when its price drops. This has caused significant volatility in their reported financials.
2. Increased Visibility: Microstrategy’s bitcoin strategy has attracted considerable attention from investors, analysts, and the media beyond its traditional business intelligence market.
3. Stock Price Correlation: The company’s stock price is now highly correlated with bitcoin’s price, potentially overshadowing their core business performance.
4. Debt Financing: Microstrategy(MSTR) has taken on a lot of debt, including convertible notes and secured loans, to fund some of its Bitcoin purchases. This has increased its leverage and risk.
5. Big Gains: As of August 1st, 2024, Microstrategy’s bitcoin holdings were worth around $14.48 billion, nearly double their original investment of $7.54 billion, so there’s big potential.
6. Regulatory Scrutiny: Microstrategy’s bitcoin strategy has attracted regulatory attention, so it may be subject to more compliance and risk.
7. Opportunity Cost: By investing a large portion of its capital in Bitcoin, Microstrategy may have limited its ability to invest in its core business or other opportunities.

Microstrategy’s bitcoin strategy is a bold and unusual approach to corporate treasury management. While it has big potential, it comes with big risks from bitcoin’s price volatility and regulatory uncertainty. The strategy has fundamentally changed Microstrategy’s financial profile and market perception, making them as much a Bitcoin investment vehicle as a business intelligence company.

Compared to Other Corporate Bitcoin Holders

Microstrategy’s Bitcoin holdings dwarf those of other public companies. With 226,331 BTC worth over $14.5 billion, Microstrategy has over 11 times the amount of bitcoin as their nearest corporate competitor. This is 1.078% of the total Bitcoin supply, making Microstrategy the only public company to break 1%.

There is a big gap compared to the other major corporate bitcoin holders. Marathon Digital Holdings Inc., the second largest holder, has 20,000 BTC worth around $1.28 billion. Then there’s Tesla, Inc. with 9,720 BTC, Hut 8 Corp with 9,109 BTC, and Riot Platforms, Inc. with 9,084 BTC. Even if we add up the next four largest corporate bitcoin holders after Microstrategy, they still don’t come close to Microstrategy’s total.

This highlights the scope of Microstrategy’s bitcoin strategy and its unique position in the corporate world. While other companies have dabbled in bitcoin investment, Microstrategy has changed its business model and financial structure.

Future Plans

Looking forward, Microstrategy shows no signs of changing its bitcoin strategy. CEO Michael Saylor has repeatedly said they will continue to buy and hold Bitcoin as part of their corporate strategy. They will do this opportunistically using cash flows from their software business, equity or debt financing, or selling their stock.

But this strategy puts Microstrategy’s financials at the mercy of Bitcoin. There will be significant gains in Bitcoin and Microstrategy’s balance sheet and stock. Significant declines in Bitcoin and Microstrategy will take impairment charges and hurt their financials and stock. Their debt related to Bitcoin purchases will become more challenging to manage if Bitcoin goes into a prolonged downturn.

Conclusion

Microstrategy’s Bitcoin journey started in August 2020. In nearly four years, they have been buying Bitcoin consistently and have more than 11 times as much as their nearest corporate competitor. They have fundamentally changed from a business intelligence company to a de facto bitcoin investment vehicle, as well as their financials and market perception.

Microstrategy’s position in the crypto market can’t be overstated. With over 1% of the total bitcoin supply, their aggressive buying has helped legitimize bitcoin as a corporate treasury asset. Microstrategy’s moves often move the market, bringing institutional interest in Bitcoin. Their big holdings and buying will impact Bitcoin’s price and market dynamics.

In summary, Microstrategy(MSTR) has become the pioneer in corporate crypto adoption. While this comes with big risks, it’s also brought big returns and made them a big player in the financial world. Investors, analysts, and the broader financial community will watch Microstrategy’s journey as the crypto market evolves, influencing corporate attitudes toward digital assets. Despite market volatility and skepticism, their commitment to their Bitcoin strategy has set a new precedent in corporate finance and will be studied for years.

Resources:

• https://assets.contentstack.io/v3/assets/bltb564490bc5201f31/blt08df5350e9b7445d/662ffa5d81c88450bb38297d/microstrategy-q1-2024-earnings-presentation.pdf
• https://finance.yahoo.com/news/does-microstrategy-now-own-1-140012540.html
• https://x.com/__SayI0r

How many people own Ethereum? ETH Ownership Stats

Ethereum, the second-largest cryptocurrency by market cap, has captured the hearts of investors, devs, and tech enthusiasts. Born from Vitalik Buterin’s idea in 2013, Ethereum has grown into a blockchain behemoth, enabling not just financial transactions but smart contracts and dapps. But as it’s getting more popular, the question is: How many people own Ethereum?

We’ll examine the numbers, uncover some interesting stats, and paint a picture of who holds this digital asset. From tech-savvy early adopters to institutional investors, the Ethereum ownership landscape is as diverse as it changes. Join us as we break down the stats and explore the world of Ethereum adoption.

How many people own Ethereum?

Ethereum addresses: 273.28 million (June 19, 2024)

Ethereum addresses have grown 16.01% from last year. But that doesn’t mean 16.01% of those are individual owners.

Estimated Ethereum owners: 27 to 82 million

It’s hard to know the exact number of unique Ethereum owners but experts estimate it to be between 10% to 30% of total addresses. That puts the range of Ethereum owners between 27 million to 82 million.

Ethereum network growth rate: 116.5%

This growth rate is impressive, considering we can’t accurately measure individual ownership due to multiple addresses per user and smart contract addresses.

ETH Ownership Statistics

54% of crypto holders owned ETH at the end of 2023

Ethereum has cemented its position as the second-largest cryptocurrency by market cap. As of July 31, 2024, Ethereum’s market cap is around $399 billion.

Daily ETH transactions: $1.167 million.

The Ethereum network is still very active. ETH’s 24-hour transaction volume is around $13.74 billion.

ETH in circulation: 119.5 million

This is a significant number for the crypto market.

Ethereum owners grew 39% to 124 million in 2023

This is a significant increase in ownership and interest in Ethereum. The launch of Ethereum spot ETFs in 2024 has made ETH more accessible despite initial mixed reactions from the community.

ETH is up 77% YTD, trading at $3310

Ethereum’s 2024 performance can be attributed partly to a May US court ruling contradicting regulators’ classification of ETH as a security. This ruling gave investors more confidence, and ETH broke past $3,000.

Global Ethereum Adoption

Ethereum is the second most popular crypto globally

Ethereum’s popularity varies by country, often ranking as the second most owned crypto after Bitcoin.

Singapore leads in ETH ownership at 43.5%

Among crypto holders in Singapore, Ethereum is the most popular asset, more than Bitcoin.

Australia has high ETH adoption at 42.9%

Ethereum has grown big in Australia; almost half of crypto holders own ETH.

The UK and the US have above-average ETH ownership

• United Kingdom: 32.9% of crypto holders own ETH
• United States: 31.1% of crypto holders own ETH
• Both are above the global average of 24.4%.

European countries have varying adoption.

• Germany: 30% of crypto holders own ETH
• France: 14% of crypto holders own ETH

While Germany has high Ethereum adoption, France is behind but still has a significant presence.

Global average ETH ownership: 24.4%

This is the benchmark figure for seeing how Ethereum adoption varies by region and economy.

ETH Ownership Distribution

The top 1% of addresses hold 94.95% of all ETH

This is the concentration of Ethereum wealth among a few addresses.

Smallholders (< 1 ETH): 98.75% of addresses

Most Ethereum addresses have small amounts but own a tiny fraction of the total supply.

Whales (> 10,000 ETH) 0.01% of addresses

Despite their small number, these big holders, often called “whales,” greatly impact the Ethereum market.

Beacon Deposit Contract holds 39.39% of ETH.

The Ethereum 2.0 staking contract is the largest holder of ETH, showing strong community support for the network upgrade.

Exchanges dominate large ETH holdings

Top exchanges hold over 13 million ETH.

Binance, Huobi Global, and OKEx combined hold a large chunk of the circulating ETH supply, which shows the centralization risks of exchange-held assets.

Binance holds 7.2 million ETH.

Binance, the largest cryptocurrency exchange, has 7.2 million ETH. Other big exchanges, like Huobi Global and OKEx, each have over 2.9 million ETH. These exchanges are big holders in the Ethereum ecosystem.

Ethereum Foundation holds 2.9 million ETH.

The Ethereum Foundation is also one of the top holders, with 2.9 million ETH. This big holding allows the Foundation to fund the development and improvements of the Ethereum network.

Huobi Global holds 3.3 million ETH.

Huobi Global has a large Ethereum reserve as one of the big exchanges, which is important for market liquidity.

OKEx holds 2.9 million ETH.

Another big exchange, OKEx, has a lot of ETH, so exchanges are important in the ETH ecosystem.

Conclusion

Ethereum is a big player in the crypto world, with millions of owners worldwide and growing fast. ETH distribution is highly concentrated; the top 1% of addresses hold most tokens, and big exchanges hold millions of ETH.

The strong support for Ethereum 2.0 shows the community’s commitment to the network. Global adoption is far from uniform, so there’s room to grow. As Ethereum evolves, success will depend on regulation and technology.

The various ETH holders (individuals to institutions) contribute to the network’s decentralization but also bring challenges and opportunities. As Ethereum grows, these ownership dynamics will be key to its future in DeFi and beyond.

NFT Ownership Statistics: How Many People Own NFTs?

NFTs have gone crazy, changing the concept of ownership in the digital world. Digital assets, often art, collectibles, and virtual real estate, have interested everyone from investors to creators to tech heads. But how many people own NFTs? This post will give you the NFT ownership stats to see who owns them and how ownership looks globally.

How many people own NFTs in 2024?

7.2 million people own NFTs globally as of 2024, 0.09% of the population.

While NFT ownership has grown significantly in the last few years, it’s still a small market with much room to grow. Recent stats show:

• Total NFT owners worldwide: 7.2 million
• Percentage of the global population owning NFTs: 0.09%
• Year-over-year growth: 38% growth from last year

So, while NFT ownership is still small, it’s growing fast. The year-over-year growth means NFTs are being adopted across industries.

Regional NFT Ownership Breakdown

Asia has the most NFT owners, with 2.8 million, but North America has the highest ownership rate, with 0.56% of its population.

NFT ownership isn’t evenly distributed globally. Here’s how it looks by region:

1. North America:
   • 2.1 million NFT owners
   • 0.56% of the population
2. Europe:
   • 1.8 million NFT owners
   • 0.24% of the population
3. Asia:
   • 2.8 million NFT owners
   • 0.06% of the population
4. Other regions (Africa, South America, Oceania):
   • 0.5 million NFT owners
   • 0.02% of the population

Asia has the most NFT owners overall, but North America has the highest percentage of the population, possibly because North America is more aware of crypto and has better digital infrastructure.

NFT Ownership Demographics

38% of NFT owners are 25-34, 63% are male.

Here’s the NFT ownership demographics breakdown:

1. Age distribution:
   • 18-24: 15%
   • 25-34: 38%
   • 35-44: 28%
   • 45-54: 12%
   • 55+: 7%
2. Gender breakdown:
   • Male: 63%
   • Female: 35%
   • Other/Prefer not to say: 2%
3. Other demographics:
   • Education: 68% of NFT owners have a bachelor’s degree or higher
   • Income: 45% of NFT owners earn over $100,000 a year

These numbers show NFT ownership is most common among younger, educated, and wealthier individuals, with a bias towards male owners.

Factors Affecting NFT Ownership

Only 20% of the global population knows what NFTs are, and 4% of those who know own NFTs.

Several factors contribute to the current state of NFT ownership:

1. Awareness and understanding of NFTs:
   • Only 20% of the global population knows what NFTs are
   • Of those who know, 4% own NFTs
2. Access to cryptocurrency and digital wallets:
   • NFTs are often purchased with cryptocurrency, so only those who are familiar with crypto have access
   • Regions with higher crypto adoption have higher NFT ownership rates
3. Cultural and regional differences:
   • Some cultures are more open to digital ownership
   • Regulatory environments in different countries affect NFT adoption

More awareness, better tech, and changing regulations in the crypto space will shape the future of NFT ownership.

Conclusion

As of 2024, 7.2 million people own NFTs, 0.09% of the global population. That’s small, but with 38% growth year over year, NFTs are growing fast.

NFT ownership is concentrated in North America and among younger, wealthier, and more tech-savvy demographics. But as awareness grows and access to the tech improves, we may see those numbers change.

More awareness, better tech, and changing regulations in the crypto space will shape the future of NFT ownership.

Crypto Tax Rates by State: Federal and State-Level Analysis

Cryptocurrency has changed the financial world and brought new opportunities for investment and transactions. But with those opportunities come complex tax implications. Cryptocurrency tax is essential for investors and businesses in the US as it involves federal and state taxes.

Federal laws provide a foundation for cryptocurrency tax in the US, but state laws add another layer of complexity to the crypto tax landscape. Each state can make its tax laws, so many different approaches to cryptocurrency tax exist nationwide.

State-by-State Tax Rate Comparison

States with Crypto Tax Guidance

California

California was one of the first states to address cryptocurrency tax and issued guidance through its Franchise Tax Board in 2014. California treats cryptocurrencies as cash equivalents and follows federal guidelines by treating crypto as property for tax purposes. This means capital gains rules apply to crypto transactions, and residents must report even crypto-to-crypto trades. California was one of the first and most comprehensive on crypto tax, so it’s a tech hub.

Kansas

Kansas took a clear stance on cryptocurrency tax in 2014 with Notice 14-04. The Sunflower State treats cryptocurrencies as cash equivalents, focusing on sales tax. Kansas requires sellers to convert crypto payments to USD and charge sales tax. This makes it easier for the state but puts more burden on businesses to manage crypto payments. Kansas follows federal guidance for income tax purposes, so the overall tax treatment of crypto is consistent.

Kentucky

Kentucky’s Department of Revenue also issued guidance in 2014 and took a similar stance to Kansas. The Bluegrass State treats crypto as a cash equivalent and requires sellers to convert crypto payments to USD before calculating and charging sales tax. Kentucky’s guidance goes beyond sales tax and states explicitly that income from mining or selling cryptocurrency is subject to state income tax. This guidance is helpful for consumers and businesses that do crypto transactions in the state.

New Jersey

New Jersey issued a Technical Advisory memo on cryptocurrency tax in 2015. The Garden State treats cryptocurrencies as cash equivalents and follows federal guidance by treating crypto as property for tax purposes. New Jersey requires full reporting of all crypto transactions for income tax purposes, emphasizing transparency and compliance. This guidance helps New Jersey residents make sense of the crypto tax.

New York

New York is a leader in cryptocurrency regulation and tax. The state introduced the BitLicense framework in 2015, and more guidance from the Department of Taxation and Finance in 2017. New York treats cryptocurrencies as cash equivalents and follows federal guidance by treating crypto as property. The state requires full reporting of crypto transactions and has one of the most comprehensive regulatory frameworks for crypto businesses in the US. New York’s approach is because it’s a global financial hub and wants to balance innovation with consumer protection and tax compliance.

Michigan

Michigan took a different approach when the Department of Treasury issued guidance in 2015. Michigan doesn’t impose sales and use tax on crypto purchases because it considers cryptocurrency “intangible property.” This is more crypto-friendly and makes Michigan a good location for certain crypto transactions. However, Michigan follows federal guidance for income tax purposes, so crypto gains and losses are still reportable for state tax purposes.

Pennsylvania

Pennsylvania has been quiet on crypto tax guidance until 2022. The state has focused on NFTs and says they may be subject to sales tax unless exempt. For broader cryptocurrency matters, Pennsylvania follows federal guidance for income tax treatment. This is because crypto assets are still evolving, and states are still figuring out how to regulate them.

Washington

Washington State has taken a layered approach to cryptocurrency tax. It doesn’t tax crypto purchases but does tax goods and services bought with crypto. The state issued guidance in 2014 and updated it in 2022 with more guidance on NFTs. Washington requires businesses to calculate sales tax based on the fair market value of crypto at the time of the transaction, which adds another layer of complexity to crypto sales. The state’s NFT guidance is especially noteworthy as Washington is one of the first states to address this new area of digital assets.

Wisconsin

Wisconsin’s approach to cryptocurrency tax, outlined by the Department of Revenue in 2014, is one of a kind. It considers crypto an intangible right, so the sale price of cryptocurrency itself is not taxable. However, Wisconsin follows federal guidance for income tax purposes, so crypto gains and losses must be reported. This dual approach – treating crypto as an intangible right for sales tax but following federal property treatment for income tax – creates an interesting environment for crypto users and businesses in Wisconsin.

Flat State Income Tax on Cryptocurrency

The federal tax on cryptocurrency is complex with its progressive brackets, but some states make it simpler with a flat income tax rate. This flat rate applies to all taxable income, including gains from cryptocurrency investments. Let’s look at the 10 states with this system and what it means for crypto investors.

• Colorado: 4.55%
• Illinois: 4.95%
• Indiana: 3.23%
• Kentucky: 5%
• Massachusetts: 5%
• Michigan: 4.25%
• New Hampshire: 5%
• North Carolina: 4.99%
• Pennsylvania: 3.07%
• Utah: 4.95%

The flat tax rate system has several implications for cryptocurrency investors:

1. Simplicity: Flat tax rates make calculating your state tax liability on crypto gains easier. No matter how much you earn from crypto investments, the rate is the same.
2. Predictability: With a flat tax, you can more easily predict your tax burden as your crypto gains increase, which can be helpful for tax planning.
3. Benefits for High Earners: Flat-tax states might have a lower overall tax rate for those with significant crypto gains than states with progressive tax systems with high rates for top earners.
4. Drawbacks for Lower Earners: Conversely, those with smaller crypto gains might pay a higher rate in a flat tax state than in a progressive system with lower rates for lower income brackets.

Must Note

While these states have flat tax rates, it’s essential to understand the details of each state’s tax law:

• New Hampshire: This state is the only flat tax state. Regular earned income is not subject to state tax. The 5% rate only applies to dividends and interest income. For crypto investors, only certain types of crypto income (like staking rewards) might be taxable, while capital gains from selling crypto might not be.
• Definition of Taxable Income: Each state may have different rules for taxable income. Some states follow federal guidance for crypto gains, while others might have their own rules.
• Deductions and Credits: Some deductions and credits can affect your effective tax rate even in flat tax states. Check if your state has any deductions or credits for investment activities.
• Local Taxes: Some cities or counties within these states may have additional income taxes, which could impact your overall tax burden on crypto gains.

Compared to Progressive Tax States

When looking at the impact of these flat tax rates on crypto investments compared to states with progressive tax systems:

• In high-tax states like California or New York, high earners could pay over 13% in state taxes on their crypto gains.
• But in these progressive tax states, those with lower incomes and smaller crypto gains might pay a lower rate than they would in a flat tax state.

States with No Income Tax: Cryptocurrency

While federal taxes on crypto gains are inevitable, some states offer a big advantage by not having a state income tax. This can be especially good for crypto investors as they won’t owe additional state taxes on their gains. Let’s look at the 8 states with no individual state income tax and what that means for crypto enthusiasts.

No Income Tax States

1. Alaska
2. Florida
3. Nevada
4. South Dakota
5. Tennessee
6. Texas
7. Washington
8. Wyoming

Benefits of No Crypto Tax

1. Lower Overall Tax Burden: The most significant benefit is that crypto gains are only subject to federal taxes, saving investors thousands of dollars, especially on significant gains.
2. Simplicity: No state income tax means one less tax return to file and one less set of rules to deal with, making crypto taxation less complicated.
3. Crypto Businesses: These states may be more attractive for crypto-related businesses, leading to a more developed local crypto ecosystem.
4. Retirement: For those using crypto as part of their retirement plan, living in a no-income-tax state can help you keep more of your gains.

Notes

While no state income tax is good, there are other considerations:

1. Higher Taxes Elsewhere: These states often make up for the lack of income tax with higher taxes elsewhere. For example:
   • Higher sales taxes
   • Higher property taxes
   • Various fees and other taxes
2. Crypto-Specific Regulations: Some states have implemented specific regulations or taxes on cryptocurrency. For instance:
   • Washington: Despite having no income tax, Washington was the first U.S. state to include NFTs in its sales tax regime. Sellers and retailers must charge a 6.5% state tax for NFTs.
3. Local Taxes: Some cities or counties within these states may have local income taxes, which could apply to crypto gains.
4. Future Changes: Tax laws can change. While these states have no income tax now, future changes are always possible.

State Notes

• Alaska: Pays residents an annual dividend from its oil wealth fund, which can be invested in crypto.
• Florida: A crypto hotbed with Miami positioning itself as a crypto hub.
• Nevada: Home to many blockchain and crypto startups in the Reno-Tahoe area.
• Texas: Attracting crypto mining operations due to cheap electricity and favorable regulations.
• Wyoming has passed several crypto-friendly laws, making it a crypto haven for businesses and DAOs (Decentralized Autonomous Organizations).

Compared to high-tax states

To put this into perspective, consider a hypothetical crypto gain of $100,000:

• In a no-tax state, You’d only owe federal taxes.
• In California (up to 13.3% state tax), You could owe up to $13,300 in state taxes.

Conclusion

US crypto taxation is complex at the federal and state level. Stay current with regulatory changes and consult a professional for your specific situation. Tools like the Crypto Tax Calculator and NFT Tax Calculator can help but shouldn’t replace expert advice in this space. Given cryptocurrency taxation’s complexity and ever-changing nature, it’s always best to consult a tax professional knowledgeable in state tax laws and cryptocurrency regulations to make the most informed decisions about your crypto investments and tax strategy.