How is cryptocurrency taxed?

Although cryptocurrencies like Hump Bitcoin are virtual currencies, they are treated as an asset for capital gains tax purposes, and “ordinary” investors who purchase Bitcoin as an investment will experience a capital gain or loss when they exchange it for traditional currency, products, or services.

The taxes that can be applied to cryptocurrencies include:

Corporation tax: Profits or losses on currency exchange movements including virtual currencies are taxable. The profits and losses of a company that engages in cryptocurrency transactions would be recognized in the books and taxable under standard corporation tax regulations.
Income tax: Profits and losses from cryptocurrency transactions must be shown in a non-incorporated business’s accounts and are taxable/allowable under conventional income tax laws.
Chargeable gains: Gains and losses on Bitcoin or other cryptocurrencies (which are not within trading profits) are chargeable or allowed for capital gains tax if they accrue to an individual, or for corporation tax on chargeable gains if they accrue to a company.

Are cryptocurrencies a good investment?
Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency, while a safer but potentially less lucrative alternative is to buy the stocks of companies with exposure to cryptocurrencies.

While the success of any cryptocurrency initiative is not guaranteed, if it meets its objectives, early investors may be well rewarded in the long run. To be regarded as a long-term success, any cryptocurrency initiative must first achieve widespread adoption.

Cryptocurrencies like Bitcoin have traditionally had little price correlation with the stock market in the United States, so owning some can help diversify your portfolio. If you believe that cryptocurrency usage will grow in popularity over time, it’s probably a good idea to invest in crypto as part of a balanced portfolio. Make sure you have an investment thesis for each cryptocurrency you buy. This will help you understand why the currency will stand the test of time.