The brass tax on crypto. How crypto is the best of both worlds when it comes to saving and splurging your tax returns.

Every year, we *hopefully* get our tax refunds. For most, it will help pay down debt or go to daily expenses. But for a lucky few, we face the great test of our financial discipline: “Do I save it or spend it?” Reddit's Partner Insights Team took a look at thousands of conversations across hundreds of subreddits to help answer this always looming question.

What they discovered is that in cryptocurrency, people are feeling like they get the best of both worlds. The potential upside feels like a lottery ticket–a clear splurge purchase, but because it’s also an investment, it’s also savings. 

Crypto might just be the one tax refund purchase to satisfy both the devil and angel on our shoulders. We’ve seen explosive growth around crypto in both tax conversations and splurge purchases.

From practical purchase to aspirational investment

Though many will receive a tax refund this year, most analysts believe that refund will be significantly less than prior years.1 Add to that the rising rate of inflation and the price of goods, and all of a sudden that check doesn’t stretch quite as far.

So what to do with it then? Vacations might get canceled. Home prices are skyrocketing. Put it in savings to earn less than 1%? No thanks. 

Enter crypto. From Super Bowl ads to 20-year-old millionaires, it’s clear there’s buzz. But more importantly, now there’s infrastructure. Easy to use wallets, online tips and guides. You don’t need to be a tech prodigy to get in the game. And unlike investing, you don’t need a big nest egg to get help. Part investment, part social currency. Could crypto make spending your tax refund cool?

Redditors are asking the same thing. On Reddit, there’s been a +417% YoY increase in crypto related subreddits, and even larger +606% growth in crypto mentions within personal finance subreddits since February 2020.2

There’s an avalanche of confusion coming around crypto tax implications—and little clarity on who will solve it.

Silicon Valley was built, in part, off of the assumption that our legal system will never keep up with our technological advancements. Move fast and break stuff, indeed.

With crypto, what’s become clear is that our tax system was never integrated into the ecosystem. Some might say it was built to intentionally skirt that system. But as many early adopters are learning, all those trades and value fluctuations have real tax implications. You may have opted out of a traditional banking system, but no one opts out of taxes.

Now fast forward to next year, where crypto is mainstream and millions have jumped on the bandwagon of celebrity endorsement. It’s unlikely those same celebrities will be helping investors make sense of the complicated tax rules. Consequently, Redditors are seeking help and how-to tips within the crypto tax conversation, with most of the sentiment being confusion and anger, understandably. 

NFTs are the harbinger of a world where purchase value is an equation between today and tomorrow.

Art or investment? Reselling or trading? Collecting or HODL-ing? NFTs sit in-between purchases and investments, making them the next wave of confusing tax conversations for consumers. In the last 6 months, excitement over NFTs have exploded, even if most of the world hasn’t fully caught on to what they are. On Reddit, mentions of NFTs skyrocketed 423% and total views on r/nftsmarketplace jumped by 300x in the last 6 months3. We’ve entered the initial hump of the hype cycle, but at its peak, we’ll be encountering a new set of tax questions that might just push the boundary of tax law.

Taking advantage of the crypto conversation.

Crypto is poised to eat into the share of wallet from tax returns. Here’s how to take advantage—whether you’re in crypto or not.

1. For crypto brands: Now is the time to double and triple down on your messaging. Remember to emphasize both sides of the equation. It’s the feeling of an investment with the tangibility of a purchase.
2. For tax brands and crypto tax software providers: Confusion abounds, and even if the volume is small today, lay the groundwork for your expertise tomorrow. Consider crypto primers that make filing in 2023 a breeze.
3. For banks/investments: If you can’t beat them, join them. How can you create an on-ramp for the crypto-curious that combines your stability and simplicity with the excitement of a new form of investment?
4. For retailers: Combat share loss by emphasizing the short term joy and long term value of your products. Partnerships with reselling, trade-in or exchange platforms not only reframe your product as an investment, but also satisfy the environmentally conscious consumer. 

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1Source: “Don't Count on That Tax Refund Yet. Why It May Be Smaller This Year.” CNBC, 11 Jan. 2022, (link) 

2Source: Reddit Internal Global Data, 2019-2022, NRF 2022 Tax Return Study (link), Bureau of Labor and Statistics (link)

3Source: GlobalWebIndex Q4 ’21, Reddit Internal Data