In the U.S., I think it is a crypto sale because the IRS treats crypto as property. https://www.forbes.com/sites/robertwood/2021/08/02/three-tax-free-crypto-transfers/?sh=40a1bcdfb3f7 https://www.irs.gov/pub/irs-drop/n-14-21.pdf That doesn't mean the idea won't work, but that ruling makes it a little more complicated for both sides.
Bitcoin is property. You're using it as collateral to get a loan. Think of a pawnshop BlockFi loan You send your btc property to BlockFi as collateral You sign the loan docs promissory note Scratch loan company wires the money to your bank account nbd You pay Scratch a monthly payment from your bank account $ You can renew the loan after a year or you can pay it off anytime If you pay off the loan, BlockFi will move the btc/cryptos to their BIA BlockFi Interest Account You start earning interest until you decide to withdraw your digital asset property back to your local wallet At no time did you sell your cryptos or you bought stock in exchange for cryptos I'm not a tax expert so you can consult your tax accountant, but just make sure you do not change the temrs I listed above
That does make sense to me, but maybe not to the IRS. https://www.forbes.com/sites/shehanchandrasekera/2020/07/21/are-cryptocurrency-loans-taxable
I get the argument and it's a good one, but the whole industry exists and IRS would have shut them down or released a statement if it wanted to BlockFi, Celsius Network and even Fidelity are in this business in the US and it's big business That article is from Forbes and is an opinion piece Here's a thought exercise, if I send 1 bitcoin to Coinbase and held it there for 1 month and withdraw 1 btc back to my wallet, that article would claim I did not get my original property back, which is technically correct anyway, I already paid my loan last year and already got my bitcoins back, I will be paying a lot of taxes because I sold cryptos to fiat last year one thing that is interesting is that the loan is not from BlockFi but from a finance company I would make a guess that Milo will not be the mortgage lender but some bank or another financial entity
That is you. If a completely unrelated industry is using a blockchain as a mascot that is a clear sign of over saturation....