Looking for a unique gift idea for the next birthday party or holiday gift exchange? Consider gifting cryptocurrency. According to the Pew Research Center, 17% of American adults have invested, traded, or used cryptocurrency as of 2023. This means that giving a fraction of Bitcoin or Ethereum could be a one-of-a-kind present for the right person.
However, it’s important to note that gifting cryptocurrency does not change the inherent volatility of the asset. Just like giving someone a lottery ticket, the recipient may end up with more or less than expected.
Here’s a guide on how to gift cryptocurrency and what you should know.
4 Ways to Gift Cryptocurrency
While investing in cryptocurrency can be risky due to its volatile nature, if you’re interested in gifting crypto, here are four ways to do so.
1. Crypto Exchange
One of the easiest ways to gift cryptocurrency is through a crypto exchange like Coinbase or Kraken. You can purchase the coins directly from the exchange and send them to the recipient’s digital wallet. Keep in mind that exchanges may charge fees for transactions, which can impact the overall cost of gifting.
How to use a crypto exchange: Select a cryptocurrency exchange, ensure both you and the recipient have accounts, get their wallet address, choose a currency, and send the desired amount.
2. Peer-to-Peer App
Peer-to-peer money transfer apps like Cash App or PayPal also allow you to gift cryptocurrency. Fees for these transfers vary based on the platform, so be sure to check the costs before sending crypto.
How to use a peer-to-peer app: Log into the app, navigate to the payment section, select the amount of crypto to send, and choose the recipient.
3. Create a Crypto Wallet
You can gift cryptocurrency through a crypto wallet outside of an exchange, but this method requires more technical expertise. By setting up a wallet, you give the recipient the ability to hold the crypto themselves.
How to use a crypto wallet: Choose a wallet, set it up either through software or a storage device, and grant access to the recipient.
4. Other Ways to Gift Crypto
If you prefer a simpler approach to gifting cryptocurrency, consider using a platform that offers crypto gifting services like EarlyBird Crypto or BitCard. These platforms allow you to gift Bitcoin and Ethereum through custodial accounts or gift cards.
How to use a crypto gift card: Decide on the type of crypto gift card you want to give and purchase directly from the provider.
How are Crypto Gifts Taxed?
Similar to other monetary gifts, you won’t be taxed when gifting cryptocurrency unless the gift exceeds certain thresholds. In 2024, the annual gift tax exclusion limit is $18,000 per recipient.
Bottom Line
If you’re considering gifting cryptocurrency, there are various ways to do so. Whether you opt for a crypto exchange, peer-to-peer app, or crypto wallet, make sure to choose the method that best suits the recipient’s preferences.