cryptocurrency Purchasing large quantities of cryptocurrency

[Thylbanus]

So, I've come into a bit of money through a home sale and I want to keep some relative worth of my gains.  I was thinking of buying $10,000 to $20,000 worth of crytocurrency.  I was curious as to the legal wranglings of doing this within the US.  I understand that the government looks upon it as any other investment and currencies as "stocks", for a simplistic definition.  I'm just wondering what moving such quantities of cryptocurrencies will cause given the Patriot Act.  Has anyone purchased such large quantities and can anyone enlighten me about the perils and pitfalls of such a venture.

 

Thanks

[knightslugger]

CC (CryptoCurrency) is not a regulated commodity in the US. Any appreciation or depreciation of CC is of little consequence to them. It's when you return to Fiat that it may become an issue for the state or federal government. Confer with your estate attorney and or accountant for those kinds of details. That's what you pay them for. Everyone's specific circumstances are different and any advice you get from others should not be taken as solid (including my own).

[DutchTexan]

6 hours ago, Thylbanus said:

So, I've come into a bit of money through a home sale and I want to keep some relative worth of my gains.  I was thinking of buying $10,000 to $20,000 worth of crytocurrency.  I was curious as to the legal wranglings of doing this within the US.  I understand that the government looks upon it as any other investment and currencies as "stocks", for a simplistic definition.  I'm just wondering what moving such quantities of cryptocurrencies will cause given the Patriot Act.  Has anyone purchased such large quantities and can anyone enlighten me about the perils and pitfalls of such a venture.

 

Thanks

You will be totally fine spending that kind of money. You will be totally fine spending hundreds of thousands or even millions of dollars in the US as well. The main complication is how comfortable you are revealing information to an exchange, virtually a broker. For example, coinbase.com, I highly regarded US-based fiat currency exchange, you can spend or sell in volumes under 10k with basic information and identity. It is relatively easy to set up and will involve a few days to confirm your identity and checking account, just like a normal broker. They will ask for taxation information and how to report, among other things, at the beginning and then once you exceed certain volumes per trade. Which can be avoided if you just cap sending and receiving transactions to $9,999. However, if you want to transfer $10,000 or more at once to or from coinbase, then you will need to give them more information(prove your identity, provide proof of residence, etc) It's not too bad, boring, following the law stuff.

 

Regardless, in the US, you do not need to worry about the legality, assuming you use a proper exchange. A proper exchange won't allow you to break the law on their end. For example, Coinbase is a cut above virtually any other exchange. The only other equally 'legit' exchange(in my opinion) is based in Stuttgart, Germany and is highly regulated and audited, bitstamp.com . Only downside is that you will be required to reveal an invasive amount of information to do anything, whatsoever. On the other hand, there are other exchanges that are on the 'sketchy' side where one should be very concerned about privacy, legality and overall security. Other than coinbase and bitstamp I can recommend bitfiniex.com and bittrex.com.

 

Coinbase/GDAX and bitfinex are all I use now.

 

Coinbase only supports bitcoin, litecoin and ethereum. If you are interested in any of the other 1,200 other coins (www.coinmarketcap.com) then you will probably find them on bitfinex.

 

My advice if I were you:

1. I would begin setting up an account with coinbase asap

 

2. After linking your bank account (credit card is available, but convenience fees are very heavy)and freeing up the liberty to invest how much you want to, set up your account with GDAX. This is like a little secret for cutting what would be commission if you were investing in the NYSE. Coinbase owns GDAX and your accounts are essentially connected. For example, after the 5 or so business days it takes to move fiat from your checking or savings account to coinbase, you can then move and use that currency instantly through coinbase or GDAX. If you choose to skip GDAX, then just expect to pay slightly higher fees and have less buying or selling options (coinbase is virtually pure market orders)

 

3. Purchase a Ledger Nano S or Trezor hardware wallet to store your bitcoin securely long term. This is very important. DO NOT leave your cryptocurrency on an exchange. Take control of it with your own usb 'bank' device disconnected to and incorruptible by the internet. Also, keep in mind that cold storage wallets only support certain coins and there are 'hot' wallets based on internet services that support anything and everything(Bitcoin is 1 of 1,200+ cryptocurrencies) but are technically less secure. A Trezor or Ledger Nano S are the most secure ways of holding your digital currency, especially long-term.

 

4. Finally, wait for bitcoin to bottom out and then buy, easy advice, but could go a long way. Bitcoin cash, in my opinion, you should stay away from, especially long term. Even though BCH has gone from ~$600 to ~$2,400 briefly in basically 72 hours, bitcoin will always be king. Wait for the bitcoin, BTC, correction that will potentially bring it all the way down to 5k per bitcoin and then buy.

 

www.coinmarketkap.com

 

You are making an excellent decision. When there are 21 million bitcoin out there in circulation, it will become a hording game; there is no inflation in this game. Bitcoin will be worth 10's of thousands in 2018.