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How do I withdraw crypto without paying taxes?

With the rising popularity of cryptocurrencies like Bitcoin and Ethereum, many crypto investors are looking for ways to access their profits without triggering tax liabilities. While government regulations vary globally, most countries treat crypto as an asset, meaning capital gains taxes apply when coins are sold at a profit. However, there are a few potential options to withdraw or spend crypto gains tax-free. Let’s explore some of the most common strategies.

Use Tax-Advantaged Retirement Accounts

One way to potentially withdraw crypto tax-free is to hold coins within tax-advantaged retirement accounts like a 401k or IRA. While not all custodians support crypto, some now allow account holders to invest directly in cryptocurrencies without triggering taxable events. As long as you follow the account rules and wait until retirement age to take distributions, you can cash out your crypto without immediately owing capital gains taxes. Keep in mind there are limits on annual 401k/IRA contributions.


  • Tax-deferred growth potential on crypto holdings
  • No taxes owed on gains until retirement distributions begin
  • Contribution amounts may be tax deductible (Traditional 401k/IRA)


  • Limited selection of crypto currently available in these accounts
  • Restrictions on accessibility – no withdrawals allowed before retirement without penalties
  • Required minimum distributions starting at age 72

Use Crypto-Backed Loans

Another option is to access your crypto’s value without selling the assets themselves through crypto-backed loans. These loans allow you to deposit your coins with a lending platform as collateral to borrow fiat currency or stablecoins. As long as you repay the loan on time, you get your crypto holdings back without creating a taxable event. The loans carry interest rates but no credit check for approval.


  • No capital gains taxes triggered
  • Maintain ownership of crypto assets
  • Often quick and convenient loan processes
  • No impact on credit score


  • Risk of liquidation if collateral value drops
  • Interest payments on loan balances
  • No additional upside on collateral while locked

Use Crypto Debit Cards

Crypto debit cards allow you to convert crypto to fiat currency and spend it directly without needing to withdraw to your bank. The crypto is sold at the point-of-sale versus when you load the card balance, so you only pay taxes on the crypto spent, not unspent balances. Some things to note are card rewards may be taxable and network transaction fees apply.


  • Only pay taxes when crypto is actually spent
  • Can be more convenient for frequent spending
  • Visa/Mastercard acceptance and card rewards


  • Transaction fees on crypto conversions and purchases
  • Volatile exchange rates can alter value when spent
  • Rewards may be taxable income

Move to Puerto Rico

Puerto Rico offers significant tax incentives to attract new residents under Acts 20 and 22. Under these laws, qualified applicants can pay 0% capital gains tax on crypto and a maximum 5% tax on dividends and interest. To qualify, you must become a bona fide resident by spending at least 183 days each year in Puerto Rico and not claim residency elsewhere.


  • 0% tax on cryptocurrency capital gains
  • Low taxes on dividends/interest (5%)
  • Tropical climate and beaches


  • Must truly establish residency for tax benefits
  • Hurricane risks and infrastructure challenges
  • Spanish is the primary language

Make Charitable Donations

Donating cryptocurrency holdings directly to a qualifying charitable organization can provide multiple benefits. You avoid capital gains taxes on the donation amount while also supporting a good cause. Additionally, you may be able to deduct the fair market value of the crypto donation on the date it was given.


  • Avoid capital gains taxes on donation amounts
  • Potential tax deduction for full market value
  • Ability to support charities and non-profits


  • No personal financial gain from relinquishing crypto
  • Tax benefits eliminated if charity does not qualify
  • May miss future upside if asset continues rising

Use a Self-Directed IRA LLC

Self-directed IRAs can hold alternative assets like real estate, private equity, and cryptocurrency through a special LLC entity. While withdrawals cannot be taken tax-free until age 59.5, the IRA LLC structure allows crypto to grow tax-deferred and be shielded at distribution. Proper administration is critical to avoid prohibited transactions that negate the tax benefits.


  • Tax-deferred growth on crypto
  • No taxes at distribution after age 59.5
  • More control and fewer limits than traditional IRA


  • Set-up and maintenance fees for LLC
  • No penalty-free withdrawals before 59.5
  • Risk of costly prohibited transactions

Defer Taxes with Opportunity Fund Investment

Investing crypto gains in a Qualified Opportunity Fund within 180 days can allow you to defer capital gains taxes until 2026. Any appreciation over your invested amount becomes tax-free if held for over 10 years. These funds invest in designated opportunity zones to supposedly stimulate economic growth.


  • Deferral of original crypto capital gains
  • Potential to exclude fund appreciation from taxes
  • Help develop communities in opportunity zones


  • Must invest within 180 days of crypto sale
  • Appreciation only tax-free if held 10+ years
  • High risks and fees with these new funds


With proper planning, crypto investors can potentially access their gains without immediately paying capital gains taxes. Keep in mind strategies like retirement accounts and charitable donations permanently relinquish your crypto, while options like crypto-backed loans allow temporary access while maintaining ownership. Consult a qualified tax professional to understand the options and risks based on your specific situation. With crypto adoption rising globally, more countries may introduce additional regulations, restrictions or exemptions regarding cryptocurrency taxation in the future. Stay up to date on the latest developments as the tax landscape continues to evolve.