Example: Jim has to pay a $10,000 student loan debt to a private lender. Assuming that Jim’s foray into the crypto industry has yielded $20,000 worth of ether over the years, he can simply sell $10,000 worth of digital assets and, in one swoop, erase his debt. While this approach seems like the right call, it does put Jim in a bad spot. He has sold half of his holdings and, in the process, reduced his position in the crypto market. Therefore, the amount he would have made if the prices of digital assets were to maintain an upward trajectory has been halved. There is also a capital gain tax (CGT) Jim is expected to pay whenever he sells his crypto holdings. In the United States, how much CGT is owed depends on how long a person has held the asset and his or her income tax bracket.
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