Crypto For Charity: What U.S. Donors Should Know

TLDR. If you have long-term appreciated crypto, donating the tokens directly to charity can avoid capital gains tax and give you a fair market value deduction.

U.S. taxpayers recognize taxable capital gain when they sell appreciated crypto. By contrast, U.S. taxpayers who give crypto directly to an organization that qualifies as a public charity under section 501(c)(3) of the tax code do not recognize capital gain on the donation. Moreover, those individuals can deduct the fair market value (not just the cost basis) of any tokens they have held for more than one year, subject to the AGI limitations and substantiation requirements discussed below.

As a result, if you plan to make a charitable contribution out of your crypto holdings, it generally makes more sense to donate tokens directly if (1) they have appreciated in value and (2) you have held them longer than one year.