Cryptocurrency Guide

General Information on Cryptocurrency

Cryptocurrency can be a confusing topic for individuals- and for charities too. Below we try to bring clarity to cryptocurrency in the context of for the charities who participate in the platform. Please send us any additional/clarifying questions you have. Please note that nothing listed here should be considered legal advice in any way.

Some Basics

A cryptocurrency is a digital or virtual asset designed to work as currency. The records of ownership of the assets are secured by cryptography, which makes it nearly impossible to steal, counterfeit or double-spend. The cryptography and exchange of many cryptocurrencies, including those accepted on, rely on the strength of blockchain technology—a distributed ledger enforced by a decentralized network of computers.

Cryptocurrency donations are on the rise.

A 2018 Edelman study on wealthy millennials found that 25% of them hold or use crypto and 31% are interested in using it, 74% say technological innovations like blockchain make the global financial system more secure. Their “bottom line”: "Don’t just keep up, but lead with technological innovation.

Fidelity Charitable’s 2019 annual report reported that they had received $30M in cryptocurrency donations in 2018 and nearly $106M since their program’s inception in 2015. They recently reported that in January 2021 alone they received $28M in cryptocurrency donations, and cryptocurrency donations were up 115% compared to 2020.

In addition, cryptocurrency donations carry specific benefits to donors and charities:

  • They minimize capital gains tax exposure to donor: Because cryptocurrency is considered property by the IRS, when individuals sell cryptocurrency, they must pay a capital gains tax on their profits. By donating it to the charity directly, the donor pays no capital gains tax on it.
  • This results in more money donated to the charity: Instead of selling the cryptocurrency and donating the post-capital-gains-tax amount to the charity, the donor can donate the full amount to the charity. As charities are tax-exempt, they are able to sell the cryptocurrency without having to pay any capital gains tax.
  • This allows for a higher tax deduction for donor: By donating the cryptocurrency directly, the donor can deduct the full fair market value price of the cryptocurrency at the time of transfer to the charity- rather than the cash amount post capital gains taxes.

The IRS treats cryptocurrency as personal property, and so donations are considered to be in-kind. These are tax deductible for the donor. A charitable organization that receives virtual currency should treat the donation as a noncash contribution.

At this point, for what we believe to be the most up-to-date information, we would refer you to the IRS Virtual Currency FAQ page questions 34, 35, 36 and 37.

Some Specifics

As with conventional currency, an individual doesn't need a wallet to spend their cash, but it certainly helps to organize it, track it, and keep it all in one place. A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys and can be used to track ownership, receive or spend cryptocurrencies.

As a charity you want to have a place where donors can send you cryptocurrency. While it is easy to set up a cryptocurrency wallet online, we recommend that most charities do not receive donations to private wallets. The security issues are too big! A few items:

  • If a private wallet's passphrase (see section below) is lost, the funds are lost for ever.
  • If any individual has the passphrase to your charity wallet they will be in control of all of your funds.
    • They in effect have complete ownership of your wallet
    • If they funds are taken, there are no refunds, chargebacks, etc., all settlement is final.
    • There is no way to implement controls- unless you do something like set up a multi-sig wallet (advanced) but you'll still need to send the crypto donations to an exchange account (below). 
  • As a charity, to legally exchange crypto donations for US dollars, you will have to do so via a regulated cryptocurrency exchange.
    • Your charity will need an exchange account . 
    • So it may be much better for charities donations directly to your exchange account.
    • See below for more on exchange accounts and potential benefits. 

Your exchange accounts (or wallets) will contain your cryptocurrency addresses. A cryptocurrency address is used to receive and send transactions on the network. An address is most commonly represented as a string of alphanumeric characters.

Each cryptocurrency has its own address type. They’re not interchangeable. For example, if you try to send Bitcoin to an Ethereum wallet, that cryptocurrency is lost forever. So, you need to get a specific address for each type of cryptocurrency.

There’s an exception: If two cryptocurrencies are built on the same chain, they can share an address: for example, Ardor and Ignis.

Please be clear what type of cryptocurrency is associated with each address you have!

A passphrase is similar to a password in usage but is generally longer for added security. Passphrases are used to manage your cryptocurrencies and wallets. Each cryptocurrency address has its own unique passphrase associated with it.

Some wallets allow you to store multiple addresses (and their associated passphrases) under one wallet account to make it easier to manage your cryptocurrencies.

On the blockchain there is no centralized control of passphrases. If lost, passphrases are unrecoverable. So, if you lose your passphrase for a particular address, you will not be able to recover the crypto associated with that address. Therefore, you must write your address down in a safe place- and/or in multiple places.

Passphrases and Ownership:

On the blockchain there is no centralized control of passphrases. If lost, passphrases are unrecoverable. So, if you lose your passphrase for a particular address, you will not be able to recover the crypto associated with that address. Therefore, you must write your address down in a safe place- and/or in multiple places. We cannot emphasize this this enough. Many individuals have permanently lost access to their cryptocurrency this way.

If someone gains access to your passphrase for a particular address or wallet, they have full access to the associated cryptocurrency. If you save your passphrase on your email or computer and someone hacks them, or steals your notebook with the passphrase in it, they have complete access to your cryptocurrency. Please be careful.

Passphrases associated with a particular address cannot be changed. If someone has had access to the passphrase associated with an address in the past, they could always have access to the cryptocurrency associated with that address.

Your charity account lives on the blockchain and is associated with a passphrase. So all the above apply. Having your account on the blockchain allows you to receive and store the donor data on the blockchain- to keep it safe and so that no central actor can access it.  

A cryptocurrency exchange or a digital currency exchange is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.

Similar to a bank account or a stock-exchange account, when you deposit or are transferred cryptocurrency to your exchange account, the exchange has custody over your cryptocurrency. Your assets are segregated and held in trust for by them for you. In other words, you do not control a particular cryptocurrency wallet and its passphrase, rather, you control the exchange account that shows you how much cryptocurrency you have with them.


  • Centralized location to view, transfer, receive and exchange cryptocurrency.
  • Ability to ACH transfer or wire dollars to your charity's bank account. 
  • They provide you with unique addresses to receive many kinds of cryptocurrency.
  • They are designed to keep large volumes of digital assets secure and insured.
  • Similar to a bank account or a stock exchange account they are a centralized authority they can help you re-set a lost password, disable an employee's account when they leave the organization, produce reports on transactions, etc.
  • You can, on the back-end, automate donation receipt and acknowledgement, exchanging of crypto for cash, and ACH-transfer-dollars-out process via services that specialize in working with charities like Engiven and The Giving Block. 

Custody Drawbacks

These are along the lines of what individuals in the sector say:

  • Similar to a bank, exchanges have control over your assets. For many individuals, centralized control goes against the philosophy of cryptocurrency. Thus many individuals holding cryptocurrency opt to keep their assets in private wallets under their control.
  • Some individuals dislike the closeness with regulator. 
  • There’s a small chance that the exchange can get hacked – that said they keep most of the assets offline.
  • Unlike banks, funds left on the platforms are no FDIC insured. 


While the Financial Crimes Enforcement Network does not consider cryptocurrency to be legal tender, it does consider exchanges as money transmitters subject to their jurisdiction. Thus, when exchanging cryptocurrency at an exchange, we suggest you use an entity licensed for money transmission in your U.S. jurisdiction. In some states, money transmission licenses also cover digital currency wallets and transfers on the platform. In other states, no money transmission license is required to operate a digital currency business.

Exchanges are required to comply with a number of financial services and consumer protection laws, including:

  • The Bank Secrecy Act requires exchanges to verify customer identities, maintain records of currency transactions for up to 5 years, and report certain transactions.
  • The USA Patriot Act requires exchanges to designate a compliance officer to ensure compliance with all applicable laws, create procedures and controls to ensure compliance, conduct training, and periodically review the compliance program.

Exchanges must follow individual states’ money transmission laws and corresponding regulations. These vary by state, and some exchanges may not be able to do business in some states based on where you are registered. Don't worry, they won't allow you to even create an account if this is the case. 

How-To Guides

To receive cryptocurrency donations and legally exchange the crypto for cash, your charity will have to set up an exchange account. The exchange account will give you addresses for each type of cryptocurrency they process. The crypto donations to those addresses will go right to your exchange account where you or a service provider (see below) can exchange them for cash and transfer the cash to your charity's bank account.

As discussed above in the 'What is a cryptocurrency exchange?' section there are a number of regulated exchanges that will allow you to accept cryptocurrency and legally exchange it for dollars. These exchanges have 'institutional' products for charities. We list a few below and then share our experience setting up our account on one of them. Please do not consider this an endorsement of any of their services. This is for information purposes only.

A few options include:

Coinbase Pro Institutional Accounts

Kraken Institutional Accounts

Gemini Institutional Accounts

They will ask for extensive information on the organization and who will be managing the account. Their process and the particular information they ask for may vary slightly by exchange but see below for an example.


A number of our charity partners have indicated that they are working with Engiven and The Giving Block who (for a fee) assist charities in setting up automatic crypto-to-dollars conversion and automatic transfer of the dollars to the charity's bank account (see next section). They both work within a charity's own Exchange Account. Both of these services use the Gemini Exchange - and help you set that up on a fast-track. Please see the 'Services' section below for more info. Note that they use the Gemini exchange because it is perhaps the most regulated of exchanges as it sits in New York - and New York regulations are currently the most stringent. 

Our experience as an example

Coinbase is an exchange. Not the only one. We encourage you to find out what is best for your charity and only include this as an example of the steps we had to go through. It should not be interpreted as an endorsement of their company, their practices or their services. We hear that Kraken, for example has a faster approval process and potentially lower institutional fees. That said, they may only do wire transfers out - so it could be more costly than ACH transfers which some of the other exchanges use. Also, for example, the service providers mentioned don't work with Kraken. Shop around!

We chose them when we started early on because it was simple to sign up, simple to use and the transaction fees were relatively low. Their transaction fees for exchanging from crypto to cash, unless you exchange a very high volume, are 0.50% of the total amount exchanged. So if you exchange $100 worth of Bitcoin to cash (or $100 worth of cash to Bitcoin), they keep $.50 (fifty cents). They are also now a public company. 

Coinbase complies with all applicable laws and regulations in each jurisdiction in which it operates.

There are two separate steps for creating a Coinbase Pro Institutional Account.

Registration: As a first step, you register and then they send you the application. They say that you will receive the application referral code 1-4 business days after you register but we received it hours later.

Application: Next you apply for an account via their Onboarding Application.

To apply for a business account and comply with financial regulations, we need to collect some information about your business. A typical application takes an hour to complete and 1-4 weeks to review after you submit it. You don't have to finish your application now, you can come back and work on it at any time. If you have a draft application, click on "Continue Application" to complete it.

Step 1: Register for Coinbase Institutional

You will need:

Legal Entity Name

Country of Incorporation

Other Business Name (optional)

Place of Business Operations (address)

Type of Business (Other)

Don’t worry this is just the pre-screening. On the real application there’s the option to identify yourself as a charity.

Global number of Employees

Company Website (optional)

Business Description

Fund Assets Under Management (USD) (zero)

Zero. You’re likely not a financial-type firm managing funds for others. They don’t mean your own charities assets.

You can register here:

Step 2: Onboarding Application

To apply for a business account and comply with financial regulations, we need to collect some information about your business. A typical application takes an hour to complete and 1-4 weeks to review after you submit it. You don't have to finish your application now, you can come back and work on it at any time. If you have a draft application, click on "Continue Application" to complete it.

You will need:

Legal Entity Name

Other Trade Names or DBAs

Place of business operations (Address)

Incorporation information

Date of incorporation

Country of incorporation

State of Incorporation

Legal Entity Type (non-profit)

Client type

Industry (non-profit)

Business type (environment, health, etc.)

Other Business Information


Articles of incorporation

Please provide a detailed description of your business that is relevant to the opening of accounts with Coinbase for this business.

Fund assets under management (in USD) (0-5m unless you manage money for others

Coinbase Products

Which Coinbase products are you applying for

Coinbase Pro

What is the purpose of the account? (Select all that apply)

Accepting/Sending crypto payments

Source of funds

Business Revenue / Profits

Related to Trading account

*Contracting Entity

Coinbase Inc

*Monthly anticipated on-exchange trading volume in USD

Likely $0-100k

If your application is approved, which email address would you like to be associated with your Coinbase trading account login? Upon approval, we will set up your account using this email address.

Verify Business

Articles or Certificate of Incorporation

Tax ID Number (Employer Identification Number, Global Intermediary Identification Number, or other local entity tax identification number)

W-9 Form. Upload a completed W-9 Form or download a W-9 Form from the link here, complete, and upload. Please complete all fields unless optional or not applicable.

Provide the following on behalf of the entity applying for Coinbase

Do you do business with individuals or entities in any of the following countries? Crimea, Cuba, Iran, North Korea, Sudan, Syria

Are you engaged in any of the following activities or industries?

Adult entertainment or services, bail bonds, cannabis, check cashing or pay-day loans, crowdfunding, debt services or credit counseling, firearms or ammunitions, gambling, multi-level or affiliate marketing, payments aggregation, pharmaceuticals, pornography, prepaid or gift cards, ransomware services, tobacco products including vaping, toxic or radioactive materials

Verify Team

Provide the following on behalf of one individual with managerial control (e.g. a Chief Executive Officer, Vice President, Treasurer or Director).



Residential Country

Provide the following for all individuals who directly or indirectly own 25% or more of the entity applying for Coinbase. (if applicable)



Residential Country

Please provide the DOB and Country of Residence for the user who is applying.



Residential Country

By submitting this application, I certify all information is true and correct to the best of my knowledge

There are services such as Engiven and The Giving Block that can operate on the back-end of your exchange account that can automate some of the main functions of receiving crypto donations including:

  • They help you set up (fast-track) an exchange account on Gemini 
  • Automatic donation receipt and acknowledgement
  • Automatic exchange of the crypto for cash when the donation arrives
    • This helps save staff time logging in to exchange each crypto donation for cash
    • This helps avoid price slippage- crypto markets can be volatile. For example if you receive a donation on a Saturday morning, by the time your staff member sees the notification and logs in to exchange the crypto for cash, the price may have gone down (or up) 10% or more
  • Automatic ACH-transfer of dollars out to your charity’s bank account 
  • Automatic creation of a new crypto address (within your account) for each donation to preserve donor privacy

These services specialize in working with charities. There are clear benefits to the automation and these firms do charge a fee. We would encourage you to look them up and see if they are a good fit for your charity - mention that you're working with us. GiveSafely charities currently work with both of them and they work with us.