Using Crypto Loans to LEGALLY Avoid Taxes 💰

Crypto loans allow you to take profits from cryptocurrency WITHOUT paying taxes, and they have tons of other benefits that make them a great tool for the crypto investor. Here's what you need to know!

00:00 - Intro
1:09 - Crypto-Backed Loans Explained
1:52 - Crypto Loans vs. Bank Loans
3:20 - Why Take Out Crypto Loans?
6:01 - How Much Can I Borrow? (LTV)
7:28 - My Experience (Celsius Network Loans)
8:58 - Step-by-Step Crypto Loan (Celsius Network)
10:12 - Best Platform for Crypto Loans

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One of the most fascinating opportunities with cryptocurrency is the ability to borrow money at practically no cost thanks to crypto-backed loans. Based on the numbers and my experience testing out this kind of product, I believe that a lot of people out there can benefit from this new form of lending, and I want to break it down further.

Crypto-backed loans are exactly what they sound like - they’re loans that you can take out against your crypto assets. When you take out one of these loans, you are using your crypto as collateral. In other words, you’re offering up your cryptocurrency to show that you’re good for the loan, locking it up with the lender in the process. When you pay off your loan, you’ll get your crypto back in full. But if you decide not to pay off the loan, the lender has the right to take your collateral to satisfy your debt.

Crypto loans don’t require any credit checks, whereas most traditional bank lending will require some form of a credit check. Similarly, crypto loans have near-instant approval, while traditional loans can take days or even weeks to be approved and processed. This means you can get access to the cash from a crypto loan within a few days, or perhaps even faster. Finally, crypto-backed loans often come with lower borrowing costs. Furthermore, traditional loans often come with all sorts of fees that you have to pay on top of your interest rates. Crypto loans, on the other hand, can enable people to borrow at lower interest rates and with little to no fees at all.

One of the most common reasons is the ability to cash out on your profits from crypto, without selling your assets. If your cryptocurrency portfolio has gone up in price significantly, you might be sitting on thousands of dollars in profit. However, if you sell that cryptocurrency in order to realize those profits, you’ll owe taxes on those returns. Taking out a crypto loan is not a taxable event, which means you can get access to substantial cash without paying anything to the government.

Another reason to use crypto-backed loans is as a replacement for an emergency fund. If you don’t like having large amounts of cash sitting around, it’s nice to have the option to take a loan out against your crypto in case of emergency.

The next reason is to add leverage to your portfolio. If the market goes up, you can earn much greater returns without having to invest more money out of pocket. However, if the market goes down, you could end up losing more money because you’ll have to pay back what you borrowed. I would not personally encourage leveraging a crypto portfolio, because the market is already volatile and it could easily backfire during a market crash.

The last reason is to do something called interest arbitrage. This is when you take out a loan at a low interest rate, then invest it in a higher-yielding asset to cover the interest payments and earn income on top of it. Although there are many ways to do this, in crypto, you are most likely going to do this with stablecoins or high-yielding defi platforms.

#cryptocurrency #cryptoloans #bitcoin

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This video is meant for informational purposes only, and is not a recommendation to buy or sell any security or cryptocurrency. It is also not a research report and should not serve as the basis for any investment decision. Additionally, I earn commissions for purchases and sign-ups made through the links above.

[WealthBuildersInvest]

I love this dude! I tried this, and almost took out a 5k loan, but I'm going to wait for now. Your channel is amazing bro, and I am binging all of your content. If I make a video on this, I'll give you credit, since you gave me a lot to think about.

[jdeanie]

Homie, you spit the realist talk I’ve ever heard about crypto/personal finance, I’ve been in the game since end of 2020. I’m a slow learner no wonder big boys hate the coin game

[always_spring]

Thanks this video was very helpful for a Middle aged woman who is new to this stuff ❤️

[lyfted]

I have a Celsius account but never got a loan. Can't wait till they create a debit card for a convenient off ramp👍 Thanks for the information✌

[cryptojedii]

My great man, you just earned a subscribe! I'd been using Nexo for a good two tax seasons for crypto loans and now I'm opening up a Celsius account as we speak - using your link/referral of course. Thank you so much for breaking this down to the masses, can't wait to share this and taking a look at your other insightful videos. Much appreciated and wishing you much continued success!!

[WealthBuildersInvest]

This is an amazing video! I was considering taking out a Celsius loan, might actually do it now hahah

[TheShrugLife]

Great video! After watching one of your previous videos on the topic, I took out my first Celsius loan today. Sadly, I have Texas rules to deal with, but still a minor inconvenience in an otherwise simple process.

[GabrielSantosStandardCombo]

This tactic is really cool and important to understand, it can be a way to delay taxes. But be careful. When the crypto is repossessed that's a taxable event equivalent to a sale. In some states the loan may be interpreted as equivalent to a sale if there was never an intention to pay back the loan and can become an expensive court battle. I imagine a future where lots of folks will be hunt down by the government for back-taxes related to this early crypto era. Furthermore, it seems like in the case of some stocks, you can take a loan against them, but it can be illegal to use that money to buy more stock. I won't be surprised if regulation of this kind reaches crypto assets in the future.

[meshalwanigaming]

Love the work and quality put into this video man!!!

[enjinman]

Celsius here I come thanks for this information.

[pokerhulk]

Do you recommend sending crypto to Celsius first before applying for the loan?

[alwkicksta]

When borrowing USDC from defi like Aave, do you think there will be an issue with the bank/IRS after you convert say $20k USDC into USD and send to bank account? I used Nexo to borrow $20k USD and didn't have any issues because it was automatically recorded/logged as a "loan" when it was sent directly to my checking account so I assume that the centralized "authorities" saw that and didn't pounce on me. Whereas with defi....seems like there will be an issue when you manually have to convert USDC to USD and send to checking account from Coinbase...it wont automatically be recorded as a loan and seems like the "authorities" will flag it. What's your take?

[bricar]

How do you avoid the tax when you have to pay back the principal? Transferring USD to stable coin (to pay it back) is a taxable event?

[exuger-prank-calls]

Thank you for this video. Won't you get taxed once you inevitably pay off the loan with the profits gained from your crypto?

[Itr-tvkt]

great video. i have a question and i hope you can help.
say i bought a coin for $50 . it became $100. i get a loan against it. put 1 coin as colleterial and borrowed 0.5 coin(valued at $50) to top up the crypto credit card. later its time to pay back the loan .. the coin crashed to $50. now i just have to buy $25 worth of this coin (0.5 coin) to pay them back? + interest fees ?
so is this how i can short a coin without getting taxed? and actually use the profit ?
let me know if this makes sense.. thanks so much

[richardhogeland]

My situation: took 71000 loan, loan now at 78000 from interest. If I invested in crypto and made profit and pay back loan with profit what amount would I be responsible for taxes. Full amount of profit, profit minus original loan, profit minus original loan and interest.

[dustincayl]

Quick question wouldn’t be the same since you need a taxed income to pay off the loan. So you end up paying the tax still?

[kilo]

Okay, do if I don't pay it back the only thing I will loose is my collateral? Will the company not let me get loans from them anymore?

[ETfrogable]

Well, I am French, I live in France, we would like to do the same thing as you guys with those crypto loans and avoid paying taxes by paying back the loans with cryptos only. Crypto to crypto trades ARE NOT taxable events in France. But, we still don't know how the tax administration will consider the crypto loans ;

Some claim that they could consider that it's a taxable event when you take out a loan with your crypto as a collateral because the exchange locks down your coins and has the right to sell them in case you get liquidated. Therefore ; they could say ' ah you see, you used your crypto, you exchanged them ' against payment ' ... But of course all of that is speculation ...

At the end of the day, the tax administration can do whatever it wants to do since they are like a mafia. I wish to all of you good luck and I hope they'll leave us alone (and you too :P )

[chadcowan]

I tried setting up a Celsius account and it says I can't because the area I live. Is this not available in the US?