How To Send Cryptocurrency As A Gift
How to send cryptocurrency as a gift
Though most Americans know about cryptocurrency, only a small percentage of them actually use it. Now it's easy to give cryptocurrency as a gift, even to recipients who may not know the difference between a hardware and software wallet or may not have a cryptocurrency exchange account. You don't even have to give a whole bitcoin (which currently costs around $48,000): You can send fractions of your preferred cryptocurrency, starting at less than $1.
While there are many different ways to give cryptocurrency, we'll focus here on the big, popular players that have made it simple and secure -- even if you or your recipient have never dabbled in digital money before.
Cryptocurrency made simple
An increasing number of mainstream financial apps, including PayPal and Venmo, have already made it relatively easy to buy cryptocurrency -- though some charge higher fees than crypto-focused apps and exchanges. And not all of them make it easy to send cryptocurrency as a gift, especially to people who don't already have accounts.
In March, Cash App debuted a new feature that made it possible for users to send bitcoin to anyone with a phone number or email address. Coinbase later unveiled a similar feature, making it easy for account holders to send bitcoin, ether and several other cryptocurrencies to anyone with an email address -- regardless of whether they already had a Coinbase account.
There are other ways to give cryptocurrency as a gift without using a centralized exchange and financial app. Those will require more technical know-how. And regardless of how you give the gift, it's worthwhile to provide your recipient with a disclaimer: The world of cryptocurrency can be a wild place where scams and misinformation are common.
How to send cryptocurrency on Coinbase
To send cryptocurrency as a gift, you'll need a Coinbase account and can access the gift feature on the app and website.
To get started, navigate to the left side of the screen and select Send a Gift.
The new gifting feature allows you to send five types of crypto assets (bitcoin, ether, litecoin, bitcoin cash, stellar lumen) to anyone, including people who don't yet have a Coinbase account. All you need is their email address: The notification email contains directions about how to set up a Coinbase account and claim the gift. The email also includes a digital card featuring "crypto-minded artwork." There are no fees beyond the cost of the cryptocurrency you are gifting. If the recipient already has an account, you can send them any of the assets Coinbase supports (there are more than 100).
Coinbase allows you to cancel the transaction any time right up until the recipient creates an account and claims the gifted cryptocurrency. However, the transaction is automatically canceled if the person doesn't create an account within 30 days.
Gifting cryptocurrency with Cash App
Cash App is a popular money transfer service owned by Block, formally known as Square, and its app makes it quick and easy to gift bitcoin to other people.
However, your choice of giftable cryptocurrency is limited to only bitcoin. At the moment, Cash App doesn't support any other assets, which makes the platform somewhat restrictive for cryptocurrency enthusiasts. But if the recipient is new to digital currency, then bitcoin is likely the asset they might know.
To send bitcoin to another Cash App user, you'll need the person's address on Cash App, which is called a $CashTag.
Once you have the $CashTag in hand, navigate to the bitcoin tab from the app's home screen.
Tap the airplane button and select the amount you want to send and the person to send it to.
If the person you're sending to doesn't have a Cash App account, you can send bitcoin to them using their phone number or email address. The person who receives your gift will then be prompted to create an account and accept the bitcoin. If the recipient doesn't create an account within 14 days, the bitcoin will go back to your account.
You can send as little as $1 in bitcoin using this service. You can find the full directions on Cash App's website.
Giving a cryptocurrency wallet as a gift
Alternatively, or in addition, you can give someone a cryptocurrency wallet as a gift -- with or without anything in it. These are hardware wallets that plug into your computer via USB port. If you do decide to set up a hardware wallet for someone as a gift, make sure to follow the manufacturer's instructions closely and keep track of the key phrases once you set the wallet up. Trezor and Ledger are two reputable manufacturers that offer models ranging from $60 to $200.
A note about taxes
Generally, the IRS focuses its interest on gifts of $15,000 or more. So, if you're just sending $50 in bitcoin to your cousin, you shouldn't have to worry about the tax implications. The IRS has helpful pages on gift taxes and virtual currencies to help you navigate the details. And when it comes to reporting your transactions in April, taxes usually kick in only when you sell or trade.
Real risks and potential rewards
In this year alone, the price of a single bitcoin has fluctuated wildly -- from a low of about $30,000 to an all-time high of more than $65,000 in November. Plenty of people have made money through cryptocurrency speculation, but it's just as easy to lose money. Though it could make a fun gift for the holidays, keep in mind that cryptocurrency assets are highly speculative, and if you buy them, a good rule of thumb is to invest no more than you're comfortable losing. It's also worth noting that cryptocurrency is a common tool in online scams and that cryptocurrency transactions -- once completed -- are generally final and irreversible. Once you send some crypto, it's as good as gone forever. Do your homework, be skeptical and have fun.
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