Tax Machine Blog™

SecondMarket says the fund will make it possible for investors to have access to the bitcoin market without dealing with the sometimes unreliable online exchanges and the complex security issues involved in storing digital money. Packaging bitcoins as a fund may also allow the investment to be kept in tax-advantaged retirement account, Mr. Silbert said.

-New York Times: Fund to Let Investors Bet on Price of Bitcoinsbitcoin

What do you think? Share your thoughts in the comments below.

  • I think that there are certainly benefits to investing in Bitcoin via an investment vehicle instead of directly. The first reason is that tracking the investment itself is easier. It also adds clarity to the nature of your bitcoin holdings for tax purposes. By holding bitcoin through a fund instead of by holding the currency itself, capital gains treatment is easier to argue. I also think that holding bitcoin this way is less likely to raise suspicion that you are also holding bitcoin elsewhere and not reporting it.

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