Bitcoin Investing Is Creating Tax Predicaments for Hedge Funds
- IRS says it’s stepping up crypto-enforcement but rules unclear
- CFTC has said crypto is a commodity, which gives tax benefits
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Dozens of hedge funds investing billions of dollars in cryptocurrencies don’t know if they’re calculating their taxes correctly, which may be a problem now that U.S. authorities have said they’re going to be scrutinizing virtual currencies.
Just like individual taxpayers, institutional investors that have plunged into Bitcoin, Ether and other digital currencies are finding there are few guidelines governing their holdings, and those that exist are murky. As a result, many funds have tried to minimize their liabilities without really knowing what the rules are.