This article does not contain tax advice, investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Bittrex has completed an agreement that allows investors to buy digital coins with American dollars. In the past, only coins traded on Coinbase could be bought with dollars while other coins had to be purchased with bitcoin first, requiring two trades to obtain alt-coins.
During 2017, this caused unexpected tax liabilities for many investors who were unaware of the tax implications for crypto to crypto trades. Opportunities to directly purchase alt-coins can help traders minimize undesired tax implications when purchasing certain coins. This can create market differentiation for exchanges like Bittrex who offer this to investors.
During an interview with CNBC Bittrex founder, Bill Shihara, noted one of the effects this shift can possibly have on the market:
“Since so many alt coins could only be purchased by way of bitcoin, the value of bitcoin and many other digital currencies were closely correlated. The value of those crypto units may now begin to decouple from bitcoin, Shihara said, as more investors transact in dollars.”
The constant theme throughout 2018 in the cryptocurrency and blockchain space has been regulations or lack thereof. Since there still is significant uncertainty around United States regulations, many financial institutions and investors have been cautious about moving into this new exciting market.
As we see US based exchanges like Bittrex work with regulators to mature the cryptocurrency market these perceptions for investors may soon change. This is a large step forward for the global crypto-community who is looking to move the industry forward by aligning with new regulations for mainstream adoption.
Patrick Camuso, CPA is founder and owner of Camuso CPA, a Charlotte, NC based CPA firm consulting to cryptocurrency investors, miners and business nationwide.