I Gave My Crypto to Charity – Here's What I Discovered

The Benefits of Donating Appreciated Crypto

Donating appreciated cryptocurrency can be one of the most tax-efficient strategies for investors who have unrealized gains. Even though crypto markets experienced some turbulence in November, the overall performance this year has been surprisingly strong. For those holding assets like Bitcoin, Ethereum, Solana, or other cryptocurrencies, there's an opportunity to make a meaningful impact through charitable giving.

Over the past 20 years, I've used a donor-advised fund (DAF) at Fidelity Charitable as my go-to tool for strategic generosity. Other financial institutions, such as Schwab and Vanguard, also offer similar programs, and more charities now accept digital assets directly. However, the rules around donating crypto can still be confusing, and even small mistakes can lead to complications during tax time.

A Personal Experience with Crypto Donations

A few years ago, I decided to make a $10,000 gift of my Fidelity Wise Origin Bitcoin ETF holdings. At the time, it was still a private Fidelity fund, and I thought the process would be straightforward. I moved the appreciated asset from my Fidelity brokerage account to my Fidelity Charitable account and tried to claim the deduction. However, I quickly hit a roadblock.

Fidelity informed me that I needed a qualified third-party appraisal before making the donation. The IRS doesn't consider crypto a traditional security, so any noncash donation over $5,000 requires an independent valuation. I asked how much that would cost, and the answer was between $500 and $600.

This felt counterintuitive: I was donating an asset already held by Fidelity to Fidelity, yet I had to pay for the privilege. That year, I skipped the crypto donation and instead gave appreciated mutual-fund shares, which didn’t require an appraisal.

Last year, I tried again, this time donating $4,800 in Fidelity crypto, just under the $5,000 threshold. This time, no appraisal was needed, and the transaction went smoothly. I plan to do the same this year.

The key takeaway is to know the limits. For gifts under $5,000, the process is quick and painless. If you go above that, factor in the cost and logistics of an appraisal before year-end and be prepared to file Form 8283 with your tax return. Another option is to give incrementally to avoid appraisal fees.

Despite the paperwork, donating appreciated crypto remains a smart move for investors with unrealized gains. You avoid paying capital-gains tax on the appreciation and can claim a charitable deduction for the full fair market value if you itemize.

How the ‘One Big Beautiful Bill Act’ Affects Charitable Giving

The tax landscape for charitable giving is evolving with the passage of the One Big Beautiful Bill Act (OBBB), which became law in July. This legislation preserves key elements of the 2017 Tax Cuts and Jobs Act while introducing several new provisions that could reshape how investors approach charitable giving.

Here are three important OBBB provisions to understand as you plan your year-end strategy:

1. Above-the-line deductions are back — for everyone
   Starting in 2026, even taxpayers who don’t itemize can deduct up to $1,000 (single) or $2,000 (married) in cash donations to qualified charities. This won’t apply to donor-advised funds or private foundations, but it could encourage broader giving among households taking the standard deduction.

Takeaway: This change makes generosity more accessible. Millions of households that don’t itemize will still get a small but meaningful tax benefit for supporting qualified causes.

1. Top earners face a cap on deduction value
   If you’re in the highest tax bracket, your charitable-deduction benefit is now capped at 35%, even if your marginal rate is higher. If you’re considering a large gift, you may want to accelerate it into 2025 to maximize the deduction before the new limit takes effect in 2026.

Takeaway: For high-income investors with appreciated crypto, this could be the last window to lock in full deduction value before the cap hits.

1. New “floor” for deductions
   Beginning in 2026, itemizers can only deduct gifts that exceed 0.5% of their adjusted gross income. For example, a couple with an AGI of $300,000 could only deduct donations above $1,500. Corporations face a similar rule, with a 1% threshold.

Takeaway: The “bunching” strategy — making larger, less frequent donations — becomes even more important for maximizing future deductions.

Time Is Money

With the December 31 deadline for donations looming, it’s time to take action. The good news is that DAFs and large charities are now fully set up to handle crypto donations. Talk to your tax adviser to see if donating crypto this year makes tax sense for you.

Every year, I use the “Donating Appreciated Assets” tool on the Fidelity Charitable site to help decide which assets have appreciated the most and yield the greatest tax break. Although my income is less than in prior years, I’m still taking advantage of this tax-efficient way to do good.

And if Bitcoin has a Christmas rally, I’ll donate a little more.