[00:00:00] Bob Wheeler: The mere mention of cryptocurrency sends some people into a tailspin. What is it? How can you make money from it? And most of all, when is the best time to invest in crypto? And if you did get in at the right time and made a substantial gain, what steps do you need to take to ensure? Doesn’t all go to Uncle Sam.

Mic frame CPA of crypto tax cpa.com dives into the world of crypto and reveals the risky reality of the blockchain and the irony of the massive potential losses and the tax liabilities that investors are unaware of. In this episode, we discussed the number one myth around taxable income in the crypto space, what investors can do to avoid costly tax liabilities when investing in crypto, and some of the legal implications of trading crypto.

To learn more about some of the tax implications, grab Micah’s free Guide. Seven Crypto Tax Mistakes Most Accountants Miss that will eat up your profits. Link us in the show notes. I’m Bob Wheeler and this is Money You should Ask where we explore why [00:01:00] we do what we do when it comes to money.

Micah Frames. CPA is a crypto tax accountant who has been practicing for 10. He’s an investor and user of blockchain technology and works to provide valuable advice to clients regarding rapidly changing crypto situations. Welcome to the show, Micah. I am so excited to be talking to you today.

[00:01:40] Micah Fraim: Thanks for having me, man.

I’m really excited to do this. You are the

[00:01:43] Bob Wheeler: crypto tax cpa, so what does that mean for our listeners who are

[00:01:47] Micah Fraim: still learning? Mostly just that I not only have a tax expertise in crypto, but I think the thing that a lot of the CPAs who get in this space, miss. They’re not actual crypto investors or enthusiasts.

[00:02:00] They kind of approach it from an academic standpoint where they’re reading papers about it in the tax treatment, but they’ve never once actually engaged with the blockchain, which is fine. That’s way better than most CPAs are doing. But there still ends up being a disconnect when you’re not actually using the tech yourself.

So that’s been our journey the past couple years is learning it not only as an investor and user, but as cpa.

[00:02:24] Bob Wheeler: So I’m older. There’s a lot of people out there, younger people doing crypto. Crypto’s only been around for a little bit, so a lot of folks are still saying, what’s crypto? Yeah. Can you explain it?

Like in basic kid terms? Like for those of us that are,

[00:02:39] Micah Fraim: huh? Oh, I’m the wharf. . . I don’t go on these to talk about the tech side because even though I understand it better than most CPAs, I have a rudimentary understanding compared to true blockchain people. Yeah. But I mean, at its core, Crypto and blockchain is decentralized process and computing.

It’s based on [00:03:00] decentralization versus centralization. So one of the examples I’ll given the one that really just made crypto click for me where I understood the use case of a project is video games. Cuz back when I was younger, I loved video games and had the time, and now you get old and your joy gets stolen from your life and you don’t do it.

If I played a ton as a kid, and if you’re playing an online game, it’s being hosted on some aws, some Amazon server farm somewhere, and that’s what’s powering the game, and that’s what you’re playing based off of. Well, there’s this one project I thought was interesting that it’s powered by node technology to where there’s 20,000 nodes out there where people are running these programs on their computer and sort of crowdsourcing the computing for this online game to be played.

Okay. That’s just one example, but. Same thing can happen with payment processing different things. Again, I’ll let the people who are true tech experts speak to this, but there can be significant advantages to these things [00:04:00] being decentralized, even just from a security standpoint. There are some big projects out there to where if you get someone who’s attacking a centralized repository of information, that’s how we end up with these Equifax leaks or Anthem or these different.

But if you have it towards decentralized, that breaks up the pockets and they’re only able to get access to a smaller amount versus the whole thing. There’s a million different potential use cases out there for it, but that’s kind of the overarching crux of what’s behind it. .

[00:04:31] Bob Wheeler: Okay. Now, crypto wasn’t around when you were a kid, so mm-hmm.

did you have the vision, this is what you wanted to do and you just had to wait for it to arrive? No. ? Yeah. Or you were just like, no, I just want to be a cpa? Yeah,

[00:04:43] Micah Fraim: I just wanted to be a cpa and we’ve been in practice now 10 ish years. What happened is after the first couple, we started working with online businesses or other growth centric businesses to where they had rapidly changing situations cuz I get bored really easily.

When we’d [00:05:00] meet with clients, they had the same situation for 20 years and nothing was ever gonna change, right? I can’t provide a lot of value then. So these online businesses are rapidly shifting, have these big peaks and valleys, and then when we got involved in crypto, we saw that sort of on steroids where it’s so rapidly shifting, there’s hardly any regulation, hardly any guidance.

At least for me, where I’ve got this short attention span sometimes. It was kind of a perfect fit. You give advice one month and the next month it’s outdated. Right. That’s what really attracted me to it from the CPA side. Well

[00:05:35] Bob Wheeler: that’s good cuz then a month later you can go, Hey, I told you the truth, back then it changed.

That’s not my fault. , you can always dodge a bullet cuz it was true in August. .

[00:05:43] Micah Fraim: It’s fun for us, but it’s awful for the investors and that’s one of the things we’ll talk about. You can count on basically one hand the things the IRS has explicitly issued guidance on. And the rest of it, we’re having to sort of find something that’s analogous or in established [00:06:00] case law or tax guidance, find something that roughly matches with a crypto equivalent.

It’s not like the iris has given us real guidance on most things. . Well, it’s

[00:06:09] Bob Wheeler: a little confusing, and I know in the beginning it was sort of explained to me, if you buy a piece of pizza with crypto somewhere, you’ve got a capital gain. Mm-hmm. because you just sold off some crypto, or if you buy a car, so now all of a sudden I have a capital gain or a capital loss with my crypto.

At the same time I’m purchasing a car. And that would start to be crazy if every time I had a transaction I’ve just done a

[00:06:31] Micah Fraim: capital gain. Oh, it’s awful. And the areas of crypto that have seemed to do better are these ones that you might call utility tokens, where it’s getting away from the payment processing and the currency side.

Cuz crypto has so far kind of failed as being an actual cryptocurrency. Crypto for federal tax purposes right now at least, is considered property. So every time you dispose of it, and that can be, you’re using a crypto debit card and you’re swiping it for $5 at Starbucks, every time you [00:07:00] have a transaction, every single one of those is a capital gain or capital loss, which most people thank good or bad aren’t spending their crypto too much.

They’re using ED as an investment vehicle. But if you are spending. On one of these debit cards, or you’re just are doing everything electronically and you’re paying people with crypto. Every payment you make is a capital gain or capital loss. So there’s some proposed legislation out there that would help fix that.

I think it’s called the Virtual Currency Fairness Act, or something along those lines. Where they said if it’s under $200, it would be exempt from those reporting requirements. But even that, I’ve said they’re gonna have to tweak that because otherwise you’re gonna have a bunch of people who are selling off a million dollars of Bitcoin, but they’re doing it $180 at a time to get right on the games.

[00:07:46] Bob Wheeler: Yeah, that would take a long time. Yeah. There’s so much confusion. I know for clients, they’ll go, I don’t know, I moved it from this wallet to the other wallet, and then I moved some from Ethereum and then I moved it over to Light Coin and then a, [00:08:00] it’s like following a nightmare.

[00:08:02] Micah Fraim: It is, and the problem is, unless you’re just trading basically on one centralized exchange, so you’re on Coinbase and that’s where you do all of your.

Coinbase will keep pretty good track of that for you. So you’ll have your holding period, your cost basis, all of that. But if you’re sending money from different exchanges or if you’re on True Defi, a self custody wallet, it’s not keeping track of any of that for you. So you’re responsible for doing it yourself.

and it’s next to impossible to do that without using one of these specialized software programs like Coin Track or Coin Link. But even those, we always say they still feel like they’re in beta testing. Like they’ll get you 90% of the way there, but they still are never quite right. So you still have to go through and redline them, make adjustments, even if you’re using one of these software programs.

So for your run-of-the-mill investor, it’s arduous to keep up with it.

[00:08:57] Bob Wheeler: And you yourself, do you do a lot of [00:09:00] investing in crypto? I was at a conference and the speaker before me was saying, look, I don’t understand it, but I’m gonna put $10,000 in cuz if I lose it, I don’t care. But if I miss the boat, I’m gonna be really angry.

Yeah. But my light coin. Which is the one I’m still holding onto, man. I don’t think I’m ever gonna get my money back, but I just can’t bear to let it go.

[00:09:19] Micah Fraim: No, because it’s sort of like people who try to time the market. Yeah. Where, I can’t remember what the stat is, but the average rate of return is that eight to 10%.

but it’s something like over a 20 year period, if you missed the top like 40 days of bull runs, I think that number goes down to like two or 3%. It’s something ridiculous to where if you time it wrong, you lose all the upside exposure. So I’m kind of along the lines of that guy where I’ve got a decent amount of money in crypto, I’m continuing to dollar cost.

A lot of my positions are down quite a bit, but I’m much happier. Take a little bit of a beating and it not giving me the rate of [00:10:00] return I’d like versus saying, forget this, I’m done. And then we have another bull run the way that we did in, I guess it was 20 16, 20 17. Then in 2020 if we have anything like that, then I’m gonna be much more upset if I liquidated positions than I am right now having a.

[00:10:19] Bob Wheeler: Yeah. And I knew a couple people that would say, look, I just got $800,000. I mean, I saw the checks, . Yeah. But I just know I’m not the guy. So I’ve got my little bits, I did my little thing so I don’t miss the boat. Mm-hmm. . But I am not like some of my clients that are investing heavily, but they also know a little bit more what they’re doing and they’re in it to win it.

So,

[00:10:39] Micah Fraim: but even those people, and again, this is a big part of my practice at this point, people are geniuses until they’re, Everyone’s smart in a bull market. That’s kind of what we’re seeing that with not exactly the same thing, but we’re seeing this with this FTX failure. Everyone trusted. Sam Bankman Fried.

He’s on Forbes covers that. He’s [00:11:00] the next Warren Buffet. He’s got Kevin O’Leary, they’ve got the stadium and naming rights and coming to find out that there was no internal controls, no auditing being, uh, no due diligence whatsoever. So now we have about 10 billion the customer funds that are missing.

It’s not the same thing, but I’ve seen so many people who are crypto gurus who say, if you followed my advice, and people who have followed their advice and said, well, why just do whatever this guy tells me to do, and I’ve made half a million dollars this year, but the same advice from that guy in 2022 would lose them half a million dollars, so, right.

I love crypto. I think from the utility side, especially of blockchain, there’s so much potential, but people have to understand that what a risky proposition it. That if it goes well, it goes really well, but if it doesn’t, you get that exposure just as severely, if not more so on the downside. And if you understand that, fine, I’ve got no problems with it.

But the people who invested during [00:12:00] the bull run don’t realize those risk factors. Are the ones who are just absolutely getting their butts handed to them. And one thing that will happen with that at some point I think we should touch on is that people will, they’ll have realized taxable gains either from trades, right, or mining or no income, or any anyway, where they’re getting staking income, something that’s a realized taxable net, but they just keep rolling it back into the project, and so they’re generating tax.

But they don’t have any reserves. And then the market tanks. So we’ve had people who had over a million dollars of realized income, but kept reinvesting in the project, and then the project will go down 90%. And so even if they liquidate their portfolio, they don’t even have the money to pay the tax bill.

So I think I’ll always love the space for all the faults that it has, but you have to understand the risk profile. I

[00:12:51] Bob Wheeler: love that you talk about that. We’re all a genius until we’re not, right? I’ve had a couple clients, even just the regular stock market, make a million dollars one year, and I’m like, [00:13:00] man, you know so much.

And then the next year they lose everything. I said, what happened? They said, Nothing changed. I was thinking the exact same way. Mm-hmm. this time I got lucky. This time I really didn’t get lucky and clearly I don’t know what I’m doing and so , I thought that was really honest, but I think that’s most of us, we want to think we know what we’re doing and have some control, but a lot of it, it’s just so confusing.

And to that point, realized capital gains. I think people don’t understand that just because you don’t take the money out doesn’t mean there’s not something getting taxed.

[00:13:30] Micah Fraim: If we’re listing like the crypto tax myths like that is like the number one myth that unless you cash it out for a fiat currency, like US dollars, you don’t have tax blend income.

So people will be trading tokens back and forth, getting staking income, doing all this stuff, but. Well, I didn’t transfer it to my bank account, so it doesn’t matter. Right. And of the very few things the Iris has issued explicit guidance on, that’s one of them. They’ve said coin for coin trades are taxable events.

Yeah. And that carries [00:14:00] through to if you’re getting interest, deposits on your tokens, staking rewards, any of that. So you’ll have people who are having very active portfolios with generating gains and losses, but who aren’t bothering to report any. because they aren’t cashing out for US dollars. And if you’re on a centralized exchange that has its own downsides because there’s going to be a mismatch between what you report and what the exchanges report to the irs.

And if you’re on a decentralized exchange, there’s not that automatic like mismatch, but you’re still generating those same taxable events and. It’s almost worse in a way because it’s only gonna happen if you audit it and then you might have way more exposure and it’s coming to light three years down the line instead of the next year, and you’re able to fix it more quickly.

[00:14:48] Bob Wheeler: You know, it’s interesting, even before crypto with all the PayPal and all these different things, it wasn’t getting reported. So people were saying, ah, I don’t have to report it. Right? And then the government stepped [00:15:00] in and now they issued 10 99. For a lot of stuff, Venmo this year and in people’s mind.

Well, I didn’t get a tax document. I don’t have a taxable issue. Right. And that’s not true. And I think with crypto it’s so easy to skip over that piece because the reporting isn’t great. Mm-hmm. at the moment, which is why people love it, but it’s also bad for people that don’t understand. You just generated a taxable event.

Well,

[00:15:25] Micah Fraim: because it’s funny, the number of people who will message. Hey, how do I get around reporting this income? I’m like, you don’t. Or if you can figure it out, I’m not gonna be the one who helps guide you on how to commit tax fraud. Right. But I think people will mistake, I haven’t been caught yet with, I can’t be caught.

Right. There’s a couple things at play in that. One is that the i r is still getting its systems in place and the AI and the things they’re using to track are still being. The other thing is that since there’s so little explicit regulation out there, what we’re seeing, or we think we’re seeing [00:16:00] is the iris is mostly just trying to kick the can down the road for when they get legislation from Congress to enforce versus the iris coming up with an interpretation, someone challenging into core, and then they’re in these legal barriers.

They’re much happier just enforcing explicit guidance and legislation they receive from. So we’re largely seeing that they’re kind of just in a holding pattern right now. But once that legislation does get passed or the Iris’s hand gets forced, and they do end up in these core battles, there’s gonna be all this data that’s been mined over these years of these things that people think are just completely anonymous, and the IRS is never gonna find.

and then they’re just gonna get hammered with letters for like six years of stuff they didn’t bother to report. Yeah. Beyond the fact that there’s all this unreported income, the different buckets that crypto income can fall into are also going to be problematic because we’ve seen cases before where people have a bunch of things that fall in one [00:17:00] bucket, but then they have a bunch of capital loss.

And they think, okay, well I lost a hundred thousand dollars in this token with my capital loss and I made a hundred thousand dollars in staking rewards. Those two just net against each other, but that’s not how it works. So you have people who make no money or lose money, but still end up with pretty significant tax bills.

Some conversations we have with people are great because we’re able to save them a bunch of money. Some of them, it’s after the fact. They’re horror stories that we’re having to outline to them exactly what is going on in their situation, but it’s too late to fix it.

[00:17:34] Bob Wheeler: Yeah, and it’s so important with this stuff, in my opinion, that you seek an expert when you’ve got all these multiple things going on.

I was just talking to a client the other day, a new. . They made a lot of money and they’re like, well, we made all this money, but if we do this charity thing, and then if we do these other things on the real estate, like that’s apples and oranges, these are separate buckets. What I basically said was, you’ve got a plate with little dividers.

You know those dinner TV [00:18:00] trays that’s got corn and the meat, and yes, eventually it all ends up in your stomach, but you’re eating just the corn. Okay? And you have to segregate and separate, isolate the different types of income because they don’t all offset each.

[00:18:14] Micah Fraim: Yeah, exactly. And that’s what we will run into is that people in crypto, even people who have invested millions of dollars and made millions of dollars, will still refer to it as magic internet money, right?

People who are big into NFTs, like who have millions of dollars worth of NFTs still will refer to them as JPEGs. Like they’ll joke about it, and I think because of the fact that it’s so emergent, it’s such easy money. . People think, well, if I lose all of this, no big deal cause I put in $10,000 and I made 2 million, who cares?

And that’s fine. If you’re a really not a risk averse investor, it’s fine. From a cash flow and money standpoint, it’s not okay from a tax standpoint to ignore that . Right. And that’s what we run into all the time, is people who are very comfortable [00:19:00] losing their investments. So they keep. There are profits back into the market, but aren’t doing anything to cash out enough to at least cover their tax liabilities.

[00:19:10] Bob Wheeler: Yeah. You know, the other piece that I get sometimes is somebody will come in and say, Hey, guess what? I lost $600,000. I get to offset my gains. And I say to them, well, It’s great that we’ll be able to utilize that, but I wouldn’t be so excited that you just lost 600,000. You just lost 600,000 . I’m like, yeah, nothing to be excited about

[00:19:29] Micah Fraim: Yeah, and for some people, one of the things that’s a little bit interesting with this FTX situation is that obviously for regular capital law says you’re just using those. Either to the extent of your gains or $3,000 at a time. There is that 2009, those special provisions that came out after Bernie Madoff’s Ponzi scheme for four victims of Ponzi schemes to where you can at least use those as net operating losses to carry forward.

FTX may or may not qualify for that cuz the details keep coming at it. It seems like it should [00:20:00] the more details that come out, but we’re not completely sure. But one to what you said, you just lost $600,000. So the tax deduction isn’t making you whole and very possibly, depending on exactly the particulars of how you lost it.

You might not see the tax benefits of that for 10 or 20 years if it’s just a regular capital loss.

[00:20:19] Bob Wheeler: Yeah, and I had a client who had about four or $500,000 worth of capital loss carry forward and

[00:20:26] Micah Fraim: died.

[00:20:27] Bob Wheeler: She actually did die just recently and didn’t get to take it, which sort of sucked. Yeah. But what was interesting is a lot of people don’t connect their CPAs with their financial advisors.

And so I call advisors a lot and say, do you know that the client has $300,000 capital loss carry forward, or 500. And you’re giving them dividends of a hundred thousand dollars that I can’t offset. And most of ’em will say, oh, I had no idea. Like, well, that’s what I’m telling you. Yeah.

[00:20:52] Micah Fraim: They never think to tell them.

And you’ll have advisors, we’ve run into that too, where the advisors are running their portfolios to be really [00:21:00] tax efficient and avoid capital gains thinking they don’t wanna generate a big tax bill. Not knowing that there’s just this hundreds of thousands of dollars of losses just hanging out there waiting to be used.

[00:21:11] Bob Wheeler: Yeah, and this happens a lot. I mean, I have a lot of clients, especially newer clients, older and I see these huge capital losses and I talk to an advisor and they’re like worried cuz they’re like, oh, they just took money out of their IRA and they’re gonna owe all this money. No they’re not. They’ve got capital loss, they’ve got N O L business loss, and there’s just a lack of communication again for being more efficient in tax Strateg.

[00:21:34] Micah Fraim: One of the big issues I’ve got with CPAs in general is that we are and should be, I guess advisors and consultants, and a lot of times what will happen is we end up being glorified number crunchers or data entry people transposing numbers into a tax program and it’s hard to know exactly who to blame.

It depends on the particular advisor and the cpa, but I think because too many CPA. [00:22:00] Don’t do the proactive tax planning that we should do. Some advisors don’t bother even thinking to loop us in so that we can work together for the best outcome for the client.

[00:22:11] Bob Wheeler: Like I know myself, I got into accounting because it was logical, it had rules.

Two plus two is four. And if it’s not, I did something wrong, I there was safety in that. But at a certain point, you gotta know the rules to be able to push the envelope or to be able to creatively within the law do tax strategies that work. But I think a lot of CPAs won’t even get close to the line because they don’t understand the line.

And so I think a lot of people get MIS because of the CPA’s own fear.

[00:22:41] Micah Fraim: Oh, absolutely. It’s funny, we had a tax attorney that we work with a good bit, refer a case to us and this big, probably top 100 nationally accounting. Without getting into too many specifics, ended up costing the client somewhere between four to $600,000 in extra tax that they ended up paying.

[00:23:00] And the tax tray, I always remember the phrasing. He said, I don’t think this firm wants to take any deductions, because then if the client gets audited, they don’t have anything to defend. Wow. They were. Conservative to the point of almost, not malpractice, but basically if the client gets audited, since they’re not pushing that line at all, then they can say, look at how clean our books are, because the IRS didn’t find anything else to deduct.

Well, yeah, cuz you didn’t play the gray at all. You didn’t at least even talk with the clients of the options at the beginning. What my accounting 1 0 1 class, I love so much exactly what you said. It’s logical. It has its place. It goes in this. If at the end the numbers don’t match, you can rewind and find it.

But as it gets more abstract and theoretical, I think some of us retreat back to that sort of accounting 1 0 1, where if I can’t justify it to the penny, I’m just gonna throw my hands up and not take the deduction.

[00:23:56] Bob Wheeler: Right. And now I’ve gotten more comfortable that sometimes two plus [00:24:00] two is three .

[00:24:01] Micah Fraim: Right? No, it’s funny, the longer and longer I’m in practice and the more we work with different attorneys on things, and it’s almost like the Dunning Kruger effect of where you learn a little bit and you think you’re a genius.

They call it the peak of bounce stupid and then the valley of despair. But the more that I learned, the more I realized, I don’t know. Right. The more familiar you get and the more advanced strategies you learn, the more you realize that there’s like 17 different ways to look at so many situations. And for some of us, I think that’s exciting.

For some of us, that is terrifying and sometimes you go back and forth as to which person you are. .

[00:24:36] Bob Wheeler: Yeah, absolutely. And I think for me nowadays, having gotten into it, I do find that exciting. I love the challenge. I like a complex situation where, man, we just saved two or 300,000 bucks, or we’ve got some intercompany, or there’s just things that I can do that somebody else either just didn’t think about.

Mm-hmm. . or was too afraid to say, wait a minute, I think you can do that. And then I’ve [00:25:00] defended it with the IRS and they’re like, yeah, that works. Yeah. But you don’t know if you don’t step up to the line and take that risk. Mm-hmm. , you know, I always let clients know, this is risky, this is not, you can go over here, but you can’t go over there.

So I never push anybody in any direction. And if people wanna be incredibly conserv, I’m happy to be incredibly conservative, so I’m not trying to impose

[00:25:21] Micah Fraim: present them with the options and tell them that’s exactly what we do. We say, here’s the three ways we could approach this. If we do it this way, here’s the tax bill.

If we do it this way, here’s the tax bill. If we do it this way, here’s the tax bill. Understanding that the one that is more advantageous to you is inherently a riskier, more aggressive position. I think it’s a reasonable position, but if you do get audit, There’s a higher likelihood the IRS will disagree and then that’s gonna hurt more if they disallow it.

Yeah, but it’s just probabilities, it’s risk, appetite. Same as investing to a certain extent as here’s the reasonable range we can take and the different investments we can put you in. [00:26:00] They’ve got their downsides and their upsides.

[00:26:02] Bob Wheeler: I know with my clients, the big difference is we’ll actually represent ’em in an audit, and I know some CPAs won’t represent their clients and I probably wouldn’t go to a cpa.

Yeah. That wasn’t willing to represent me in audit if they did the returns.

[00:26:16] Micah Fraim: Yeah. We did audit defense for probably the first five years. We did two things. What we ran into as much as anything is we only had clients get audited once every year or two. And because of our niche, Our hourly rate kept going up and up because we got this expertise in areas that most CPAs won’t handle with the crypto, the online business.

My partner in the CPA firm is mostly litigation support where he does business valuations and forensic accounting. And what we found was we’re like, we’ll do it for you if you really want us to do it, but it’s gonna be the exact same price as a tax attorney and we’ll probably do half as good of a job.

So that’s where we did. But I completely agree. If you’re not willing to stand behind the work, I think [00:27:00] is the biggest red flag. . It’s

[00:27:03] Bob Wheeler: a red flag, but there are exciting, fun accountants out there like yourself and hopefully myself. So that’s the important thing. Well, Michael, we’re at the Fast Five. Fast Five is brought to you by Fam Zoo, preparing Kids for the Financial Jungle Prepaid cards, and a family finance app for kids teens, and.

Keep your kids on a budget. Track chores, automate allowances and encourage savings. If you want your kid to learn more money, habits that match your values, sign up for Zu to learn more. Check out the link in the show notes. All right, so Micah, shifting it up a little bit here in a sentence, how will crypto change the future of currency

[00:27:37] Micah Fraim: in a sentence?

Geez, you can do two. I think blockchain is gonna change the way we compute in technology. I think so much of tech and web three is going to block. I think the currency side is more undecided than anything else because we’re at this fork in the road where you could. Controlled centralized currencies by the US government, or you could see it remain [00:28:00] decentralized.

I think weirdly enough, we’re moving more and more toward the currency side of cryptocurrency might fall away and you’re just gonna see government controlled centralized currencies. So I’m not sure how much that one is. Weirdly, more ob to, yeah, less transparent than I think the tech side is.

[00:28:17] Bob Wheeler: Yeah, for sure.

How often you check your bank account every

[00:28:21] Micah Fraim: day.

[00:28:23] Bob Wheeler: Ever

[00:28:23] Micah Fraim: with apprehension? Not usually, no. I just need to know. Gotta know. On a

[00:28:28] Bob Wheeler: scale of one to 10 being the highest, how would you rate your financial security?

An

[00:28:33] Micah Fraim: eight. There’s never enough money, so Right. There’s always something. Yeah, we’re comfortable, but yeah, there’s always for room for improvement.

[00:28:40] Bob Wheeler: What’s one way that average people can get involved in crypto?

[00:28:44] Micah Fraim: The easiest way is with all these percent exchange failure. Coinbase is probably your best bet just because it is a publicly traded company, and this year alone we’ve seen Celsius Voyager Block Fire. Ftx, maybe Gemini. [00:29:00] Centralized exchanges are failing all over the place and doing it on a decentralized self custodys is complicated.

So I think Fidelity and Vanguard, real financial institutions are gonna start supporting it when they do. I think for the average investor, that is exactly where you want park it. Until that happens, Coinbase is probably your safest centralized exchange. Right. I’m with

[00:29:25] Bob Wheeler: Coinbase. It’s easy. , it’s easy. Can you describe your relationship with money in one word?

[00:29:32] Micah Fraim: Safety, I guess.

[00:29:34] Bob Wheeler: Cool. So we are at our m and m moment, our sweet spot, money and Motivation, and I’m wondering, Mike, if you have a practical financial tip or a piece of wealth wisdom for our listeners and our crypto. Listen.

[00:29:48] Micah Fraim: We talked on this a little bit, but I think the biggest thing is just truly understanding the risk profile of what you’re investing in.

The horror stories that we run into is this mismatch between. People’s risk [00:30:00] appetite and what they’re investing in. And you have people who are very risk averse for some reason, not only investing in Bitcoin, but investing in these altcoin projects that are a hundred times riskier than Bitcoin or Ethereum or light coin.

So whatever you’re investing in, understand what you’re investing in, understand the risks associated with it. And I think the problems we run into with a lot of clients is a mismatch between those two things. Yeah,

[00:30:26] Bob Wheeler: absolutely. I think, I can’t say it enough. Don’t invest money. You’re not willing to lose.

You have to look at it as extra money. Mm-hmm. , it’s sort of like Vegas just without the

[00:30:37] Micah Fraim: shows. Absolutely. We’ve had this 10 year bull run up until this past year, and I think people either weren’t around for the previous bear markets. or have just had the good times, have rolled for long enough, they forgot about them.

Yeah. And people lost that sense of prudence of that things can go down. So they’re investing money they can’t afford to lose. [00:31:00] And in things that are likely to lose money. Yeah. And it’s not fun for anybody.

[00:31:06] Bob Wheeler: It’s not pretty. Well, Michael, where can people learn more about you? I know you’ve got a book out and online.

Where can people track you?

[00:31:14] Micah Fraim: So if people are are crypto investors, they can go to crypto tax cpa.com and if they’re just regular people, they can go to our main website, frame cpa.com. And we do have this book we published, it’s on all major retailers right now. It’s called Decrypting Crypto Taxes. The print version and audible version are obviously paid, but the digital version we listed for free.

So the way we structure that book is basically the FAQs that we would get on. How is staking income tax, how is play to earn? So if people are just getting in the space and wondering how their particular activity is taxed, the table content sort of directs you to hopefully a reasonably succinct answer for what you need to consider.

[00:31:55] Bob Wheeler: That’s great. And there’s probably a lot of CPAs that need to read that book. .

[00:31:59] Micah Fraim: Yeah, it’s bad. I [00:32:00] mean, it’s bad. Like any emergent market, there’s a lot of either misinformation or just CPAs who have zero desire to deal with it or learn with it. And that’s where we’re getting a lot of clients, or their CPA says is in his eighties and he’s like, I don’t care.

I don’t want to deal with it. If you’re gonna do that, go somewhere else. And then people end up finding us. No, that’s awesome.

[00:32:21] Bob Wheeler: Well, Micah, this has been such a great conversation. I know people are out there doing the crypto, they don’t know fully what they’re doing, and hopefully they’ll take away some nice lessons from today.

So thanks so much for joining us.

[00:32:33] Micah Fraim: Yeah, this has been great, man. I’ve really enjoyed it. Thank you.

[00:32:43] Bob Wheeler: We hope you enjoyed this episode. Did you learn something new about your relationship to money today? Maybe you have a friend who has some financial blocks or beliefs that are holding them back. Please share this podcast so they too can get off the rollercoaster Ride of Financial Fears and journey towards financial.

[00:33:00] To learn how to have a healthy relationship with money, visit the money nerve.com. That’s nerve not nerd. We’ll be back next week with another perspective on money and the emotions that bind us.