US Crypto Traders Avoiding Billions in Tax by ‘Loss Harvesting’
- NBER paper says $16 billion a year at stake in wash trades
- Authors say US tax crackdown has only changed behavior
A person uses a Robocoin kiosk to buy cryptocurrency in Washington DC.
Photographer: Saul Loeb/AFP/Getty Images
This article is for subscribers only.
Crypto traders are avoiding billions of dollars in tax by taking advantage of wild price swings to “harvest” losses so they can be offset against other profits, according to a paper published by the National Bureau of Economic Research.
The analysis, based on a dataset of 500 large retail traders and billions of transactions on 34 crypto exchanges, found that the largely unregulated asset class is becoming a mainstay for tax avoidance.