Fidelity Investments Charitable Trust has received $22 million in bitcoin donations from investors who are using the gains in the price of the cryptocurrency to reduce their tax hit via charitable giving.
In an interview with CNBC late last week, Matt Nash, senior vice president of donor engagement at Fidelity Charitable Trust, said that donors had given $11 million in bitcoin through November, but that amount has doubled since the start of December. "This is giving season, after all, starting in late November and running through Dec. 31," Nash said. "People are getting smarter about donating appreciated assets, and bitcoin is the epitome of appreciated assets this year."
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To say that bitcoin is an appreciated asset would be an understatement. After starting the year trading around $1,000, bitcoin has taken off, recently valued at $18,200. While the cryptocurrency has a lot of critics, including big-name investors and regulators around the globe, it was given further legitimacy with the launch of bitcoin futures by CME Group and Cboe World Markets. That has served to push the value even higher, with some predicting that bitcoin could end 2017 at more than $20,000. With the value surging, bitcoin investors could face a big capital gains tax hit if they cash out the tokens. For those who purchased bitcoin in 2010, they face a huge taxable event if they sell, given the tokens were worth under a dollar back then.
The bitcoin donations Fidelity receives do not remain as a cryptocurrency. Nash said that Fidelity processes the gifts via Coinbase, the cryptocurrency exchange, and then once the the amount is converted into cash, it is then deposited into benefactors' donor advised funds, reported CNBC. Nash said that Fidelity will take bitcoin donations until Dec. 22. It made that the deadline because it can take anywhere from two to four days for the firm to vet the gifts.
While Fidelity is seeing a lot of bitcoin donations, it is among the handful of online brokerages that are not offering clients the ability to trade bitcoin futures. It joins Charles Schwab in taking a wait-and-see approach. Rivals TD Ameritrade, Ally Invest, and TradeStation have embraced the new bitcoin investment products, which some on Wall Street believe will be a boon to their businesses. With bitcoin on the minds of all sorts of investors, the discount brokerages that provide the ability to invest in cryptocurrency could see brand awareness increase and thus a boost in the number of new clients that trade with them.