Why go through a bank when you can lend your money at a higher interest rate on a crypto platform, while maintaining control over your funds, security, and privacy. The basic idea is the same as how lending money works in the broader financial system. You lend your capital and in return receive interest and your initial capital stake. In the crypto world, one of the interesting tax differences is around how your interest is paid out.

Income Tax

In this case, you deposit funds, and the interest is sent to your account periodically. Just like if you deposited funds at a bank the interest you earn is subject to income tax. The income tax is based on the value of the currency you receive in the payment at the time of the payment. If you decide to hold the currency longer and sell later you will be subject to capital gains when you sell.

Earning cryptocurrency through work, mining, lending, staking, or airdrops is considered ordinary income and is subject to income tax rates ranging from 10% to 37%, depending on your income level.

On the other hand, disposing of cryptocurrency—such as selling it, trading it for other digital assets, or using it to make purchases—triggers capital gains tax.

Important points to remember when lending crypto

No matter what platform you use there are a few key points it’s worth remembering:

Capital gains tax: Whenever you sell a cryptocurrency for more than you purchased it for, you generate a capital gain and it is taxable. On the other hand, if you sell the cryptocurrency for less than you paid initially, you have a capital loss, which can offset other gains in most cases.

Income tax: Earned cryptocurrency on Fulcrum, such as interest is typically seen as taxable income from a tax perspective and must be reported in your tax return.

Start Lending Crypto With Fulcrum Today

Crypto lending presents a great opportunity to generate passive income on your idle digital assets. By understanding how it works and the potential yields, you can make informed decisions to maximise your earnings.

Ready to take advantage of crypto lending? Register an account at Fulcrum to securely lend your Bitcoin (BTC), Ethereum (ETH), USDC, USDT and other crypto assets and start earning interest.

Best Interest Rates: Enjoy best yields on the market for a variety of cryptocurrencies.

Full Insurance: Benefit from robust security measures to protect your assets and full insurance.

Regulated: We are regulated by Swiss financial authority FINMA.

Don't miss out on the opportunity to grow your crypto holdings. Join Fulcrum now and start earning today!