Watching Your Wallet: What to know before getting involved with cryptocurrency

FRESNO, Calif. (KFSN) -- From risk tolerance to financial stability, there are a number of factors to consider when deciding whether to get in on Cryptocurrency.

"While it can feel like currency sitting in a wallet, especially given that they call it a digital wallet, it is considered technically a digital asset," says AJ Flores with Portfolio Advisors.

Crypto is a form of digital currency that you can buy to use for electronic/internet based payments, treat it as an investment or sell it at a gain.

Unlike traditional government-issued money, it operates without central banks.

"There are new tax forms being phased in in 2026 by the IRS, so these accounts are intended to have 1099s," Flores said.

Holding cryptocurrency is not by itself taxable, but selling cryptocurrency or using it to purchase something and it's appreciated in value that is taxable.

That's when you'll receive a 1099-DA.

"The IRS considers rules around them similar to capital gains rules, so what that means is if you've held the crypto for less than a year, it grows and then you use it to buy something, the taxable gain on that is ordinary income," Flores said.

Before getting into crypto, understand the risk you're comfortable with as there are price swings.

The core drivers of its value are supply, demand and market sentiment.

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