Bits + Bips: Crypto Investing Is About Managing Risk, Not Chasing Upside - Ep. 978
Episode publishedPodcast: UnchainedUnchained
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If you traded like ETPs, if you have ETFs, this is a second step that you need to do in addition to relying on the $10.99 b that you're getting from the broker.
Wow. That does sound quite complicated. Hi, everyone. Welcome to Bits and Bips, the interview. I'm your host, Steve Ehrlich, executive editor at Unchained, and we've got a terrific lineup for you today. First, I'm gonna be joined by Sheehan Chandrasekara, head of strategy at Cointracker. And then we're going to follow-up with Sebastian D'Arabeau, Co Founder at the DeFi Platform Steakhouse Financial. We have a lot to talk about today. Sheehan's going to join us to discuss year end tax strategies, things that everybody should be considering when wrapping up the year. We're going to cover tax los
Yeah. Thanks, Steve.
Thanks. Just one very quick disclaimer. Nothing that either I or my guests say here is tax or financial advice. For more information and disclosures, please check out unchained.com/bitsandbips. So Shian, let's get right into it. A lot of people listening have probably been paying taxes on the crypto for years, but for anyone that is kind of new, can you just briefly explain how crypto falls in line with current tax law?
Yeah. Sure. So cryptocurrencies like, you know, Bitcoin or even NFTs, they are treated as property according to IRS rules. So that means whenever you cash out or go from one crypto to another or when you earn crypto through staking or any type of rewards, those are considered taxable event. I guess, like, one easy way for you to kinda think about crypto taxes is is kinda thinking about how stocks are taxes taxed. So crypto taxes are very similar to stock. How how top how stocks are taxed with some exceptions.
Okay. Yeah. And since this is kind of a a year end sort of tax wrap up, I I would imagine we might have you back in the spring to talk about when it comes to filing. But what are some of the things that people should be thinking about when it comes to sort of finishing out the year, especially in a year where, I mean, a few assets are up, but but a lot are down?
Right. I would say, like, number one thing you should consider doing, like, especially in December is what we call taxes harvesting. So, basically, I would look at all the wallets and exchanges you have and go asset by asset and see which assets are below the cost basis. Cost basis means how much you paid for it. If the value is below the cost basis, you could consider selling them and realize the loss. And if you want, you can buy it back in this year or next year depending on, like, you know, how you wanna maintain the cushion in the long term. And when you realize those losses, you can use
Okay. And and tax loss harvesting, this is something that is not unique to crypto. I mean, can do it for for for any asset. And and correct me if I'm wrong, but I think there's a limit that you can offset up to $3,000 a year. And then if your your loss is more than that, then it can just be extended outward until you you reach the total. Is that correct?
So this is how it works. So let's say, like, you know maybe I'll I'll use an example. That's probably the easiest way to kinda understand this. So let's say you sold an asset at a loss, and then you created, let's say, like, $10,000 worth of capital losses. And for the same year, 2025 tax year, there's no capital gains coming from crypto or stocks. In that case, you can only claim 3,000 out of that $10,000 worth of total capital losses. The remaining 7,000 goes to future years. So in the future years, if you have any capital gains, you can use those 7,000 t
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