How investors are donating crypto to charity for tax benefits: CNBC Crypto World

Today, Bitcoin slips after touching $99,000 on Christmas Day. And Adam Nash of DAFI explains how crypto investors can get a tax break by donating their gains to charity. Welcome to CNBC's Crypto World. I'm Tanaya McKeel. Digital currencies were in the red this morning. As of noon Eastern, Bitcoin dipped 2% to the $96,000 level. Ether fell nearly 3% to $33.50 and XRP dropped 4% to $2.18. For our story today, Crypto World's Jordan Smith spoke with Adam Nash, CEO of DAFI, a platform that lets investors of stocks and cryptocurrencies regularly invest and donate their gains to charity. Plus, investors can get a tax break in the process. Nash explains how it works and how crypto fits into DAFI's business model. All right, Adam, thank you so much for being here. DAFI is a platform that allows people to set aside money for charity and also get a tax advantage for doing so. Walk me through the concept of this business, how it came to be, but also talk to me about how crypto fits into that very specifically for this show. Oh, sure thing. And Jordan, thanks for having me today. DAFI is actually a very simple platform to help people be more generous more often. DAFI stands for the Donor Advised Fund for You, which is a specific type of an account. Kind of like there are IRAs and 401ks for retirement or a 529 plan for college savings, a donor advised fund is a tax advantaged account where you can put money aside for charity. And yes, there are tremendous tax advantages when you put money aside for charity and even more when you put aside investments like stocks, ETFs or crypto. But the basic idea was we have all these great apps and services out there to help people save better, invest better, spend better. Why not a better platform to help people give? Giving is a huge economy in the US. It's more than half a trillion dollars a year. And yet, where are the great apps and platforms to do that? Crypto has been a big piece of that story since DAFI launched. Not surprisingly, in the last few years, more and more people have been investing in crypto. They have more and more intentions to use crypto, and that includes giving. And because of the amazing tax advantages when you donate crypto to charity, it's been huge for DAFI. So we now accept over 240 different types of crypto assets that you can donate. And we have a range of tax-free investment portfolios, including native crypto portfolios, that have been very, very popular. Yeah, as you just mentioned, you do offer a range there. I was going through the platform earlier, and I see that, you know, on the one hand, if you want to be more conservative, you've got portfolios that do stocks and some ETFs that are crypto-focused. But if you want to be more aggressive about crypto, you can go directly into the crypto assets. I guess I'm curious if you have any insight into what users are more interested in or what the trend you've seen, whether they're staying more conservative, even as crypto prices rise, or if they are getting more aggressive and they are looking more directly at those crypto assets through DAFI. Yeah, so I think it just depends on how people come in and what their motivation is. A lot of people see the advantage of donating crypto for charity, because if you've held your crypto more than a year, you have to start thinking about taxes. And it turns out when you donate crypto to charity, you get two tax benefits. One is you get the full charitable deduction for the market value of the crypto when you donate it. So that's amazing. And then second, you never pay the capital gains taxes. And a lot of people are a little freaked out about filling out all the IRS forms when it comes to crypto taxes. But for a lot of people, they want to stay exposed to crypto or invested fully in crypto. And so those portfolios have been a big part for us of getting people to put more money aside for charity. And so for some people, there's been an interest in crypto as part of a diversified portfolio. And so we're the first nationwide DAF to offer these diversified ETF portfolios, mostly Vanguard ETFs, stocks, bonds, globally diversified, but also with an allocation to the new Bitcoin and Ethereum ETFs, very low cost options there. But for people who want their charitable dollars invested purely in crypto, we have native portfolios in Bitcoin, Ethereum, Solana, as well as a blended portfolio. And so they've both been very popular, but with different audiences. Like I said, there are some people who like the idea of this is just part of a diversified portfolio. Why would you not have a small amount of money in crypto? And then there are other people who say, hey, I'm going to put money aside for charity, but I want to see it grow. I think in five years, seven years, I might have a lot of money to give to the organizations I care about. And they love having crypto add that benefit to their charitable giving. You mentioned Solana just there, and I believe it was earlier this month that you started to accept Solana donations. What is your crypto strategy, I guess, on when you decide to accept certain cryptocurrencies or add them to a portfolio? Is it based on previous returns or is it based on demand from customers? How are you sort of making that decision at DAFIA? Most of our decisions are very member focused, right? DAFIA is very unique. Most donor advised funds out there charge people a percentage of assets. It's a business model they borrowed from the investment industry. We don't do that. We free up more money for charity. We charge a flat rate. So just we started $3 a month, $5 a month for a family plan, maybe $20 a month at the high end, but it's a flat rate. And so on the donation side, we want to enable people to donate whatever crypto asset they have. So right now we support, like I said, over 240 different types of token. Basically everything that Coinbase supports. The big decision is what we support on the investment side. That's where we just added the Solana portfolio. And that's mostly based on member feedback, as well as where we see opportunities and incentives for people to put money aside. So as the market capitalizations of some of these crypto assets have grown up, we try to add them as we can and as we get member demand for them. What's your outlook for growth in 2025? Whether it's purely crypto-focused members or just the business overall, what are you looking at as we're entering another Trump administration, where we're hearing rumblings that the Trump tax code will continue? What are you looking at in 2025? Listen, the big story in 2025, I think, for crypto is just adoption and normalization. If you look at the research, more and more financial advisors and wealth managers are recommending a portion of assets be put into crypto. More and more people are hearing about crypto, not just as a way to get rich quickly, but actually as an exciting platform that actually can enable new applications and capabilities. And so I think you're just going to see more and more usage across the board. At Daffy, some of our data, our largest crypto donations have been in the millions of dollars, right? And we have accounts in crypto that actually measure in the tens of millions of dollars. But our median donation is about $1,000 of crypto, which is smaller than most people expect. So I'm actually expecting on our platform, which supports donations as small as $10 and then as big as you like, that we're going to see both larger and larger accounts and donations coming from the crypto world, as well as smaller ones coming in as it gets more normalized. OK, that's all for Crypto World today. We'll be back in tomorrow and we'll see you then.