Serious question. What is the reason for holding Tethers?
They a supposedly pinned to the dollar, so there isn't much point in holding them hoping they will gain in value. If anything their peg is questionable so they are only likely to decrease in value.
As far as I can see their only purpose is a a way of transferring between other crypto currencies and exchanges, but you would only ever need the tethers very short term while you completed the movement or transaction.
Holding tether is useful when you are trading on an exchange that has no fiat on ramp or checking account. Many exchanges are crypto-only, you send crypto in, trade, crypto out. You can hold tether if you want to be exposed to the USD position without having to send out
So to clarify... If you were holding bitcoin, but decided you wanted out because you think it's about to go down, you'd exchange for tether and hold that instead until you decided that bitcoin is ready to start going back up again.
And you accept all the associated risk rather than fully cashing out to real dollars because your jurisdiction doesn't treat crypto to crypto purchase as a taxable event?
On a crypto only exchange, if you want to have some of your holdings fixed to the dollar then you hold it as tether. Usually because you are getting out of crypto or waiting to get in. Taxable events are on you to report and pay regardless.
I believe it's not as clear cut as that. I believe that in many jurisdictions there are various rules that allow trading within certain assets classes to not be treated as a taxable event for capital gains purposes unless you trade outside the class back to a regular currency. The taxable event can occur only when you realise the profit or loss.
Whether this is the case with crypto currencies is all dependent on how your particular jurisdiction has chosen to classify crypto. Or often just your best guess if your particular jurisdiction hasn't been clear on the classification as many haven't.
Nope, it is that clear cut. Some coiners tried to convince the SEC crypto-to-crypto exchanges were like kind 1031 exchanges and the SEC had none of it. If you've been under the impression it was not a taxable event, you should solicit a very competent tax attorney to get you out of whatever hole you're looking up from the bottom of.
It's never been that way in the US. Sale of any cryptocurrency for any other or any asset or even a cup of coffee has been a taxable event since the beginning.
You realize a profit or loss every time you transact, and that's a taxable event. It's not tied to whether or not the transaction is into or out of fiat currency.
Receiving the proceeds of the sale of one crypto currency in another crypto currency doesn't magically wipe out your tax liability. Your capital gains are still taxable, just as they would be if you bartered stocks without first selling your holdings.
Oh for sure. I didn't mean to imply it was a good idea. For anybody in the USA this is not going to be a legal winner as any transformation from crypto A to crypto B is going to be a taxable event.
I bet there's still plenty of people using this for tax purposes, either misguidingly for tax avoidance or explicitly for tax evasion.
They a supposedly pinned to the dollar, so there isn't much point in holding them hoping they will gain in value. If anything their peg is questionable so they are only likely to decrease in value.
As far as I can see their only purpose is a a way of transferring between other crypto currencies and exchanges, but you would only ever need the tethers very short term while you completed the movement or transaction.