Investors are more interested than ever in cryptocurrency. Criminals are too.

Reports of cryptocurrency crimes have increased 312% per year on average since 2016, according to a report from Crypto Head, a cryptocurrency news outlet that used Federal Trade Commission data to analyze cryptocurrency crime trends in recent years. These crimes can include everything from hackers stealing investors’ coins to people falling for scams related to crypto investing.

A cold wallet — an offline device not connected to the internet— is the safest place to keep your crypto investment, according to experts.

Bitcoin has the most crime reports of any cryptocurrency, which makes sense since it’s also the oldest and most-widely held crypto. Beyond digital crimes, Bitcoin’s safety as an investment is often questioned thanks to the frequency and scale of its value fluctuations.

Despite an increase in fraud and theft, many experts tout the safety of Bitcoin investments — at least in terms of cybersecurity if not investment stability — thanks to secure blockchain technology. So, is investing in Bitcoin safe? Here’s what you need to know about Bitcoin’s safety as an asset and keeping your cryptocurrency secure if you invest.What to Consider Before Buying Bitcoin

First things first: The money you put into Bitcoin is not safe from value fluctuations.

Bitcoin is a volatile investment. If you’re looking for a “safe” investment with guaranteed returns, then don’t invest in Bitcoin — or any cryptocurrencies for that matter. Just over the past few months, the price of one Bitcoin has fluctuated between $30,000 and $60,000. Bitcoin isn’t the only volatile cryptocurrency, and other, smaller coins may be even riskier. 

“Understand that these are very volatile investments, so if big fluctuations cause you to lose sleep, this isn’t the space for you,” says Dan Herron, a CFP with Elemental Wealth Advisors in San Luis Obispo, California.

Experts recommend keeping any cryptocurrency investments to less than 5% of your portfolio for exactly that reason — and to make sure you’ve got a solid conventional retirement investment plan in the first place. It’s also recommended you have an emergency fund and pay down any high-interest debts before you put any money into Bitcoin or any other cryptocurrency.

(Read More: Here’s How Much of Your Investing Portfolio Should Be in Crypto, According to 5 Experts)

What Are the Risks Associated With Bitcoin?

The biggest security concern for many people when it comes to Bitcoin investing — like any other digital activity — is the risk of hacking and fraud. Cryptocurrency crimes are on the rise, according to data from the Federal Trade Commission, and resulted in a median loss of $1,900 per report between October 2020 and March 2021.

Often, reported crypto crimes involve scammers requesting payment in cryptocurrency, or sending unsolicited offers to help you make money or increase your holdings, according to the FTC. “One sure sign of a scam is anyone who says you have to pay by cryptocurrency,” the agency says. You should also avoid any unsolicited offers related to crypto; do your own research and buy your coins yourself using a reputable crypto exchange. Other types of scams to look out for

Initial coin offerings (ICOs) for fake cryptocurrencies

When a cryptocurrency is offered to investors before it’s launched to the market, it’s called an ICO (similar to a new stock’s IPO). But sometimes these new coin offerings can be fabricated, leading investors to put their money in a cryptocurrency that doesn’t actually exist. 

Always research any cryptocurrency before you invest. If it looks too good to be true, it probably is. Read the project’s white paper and check out the founders as part of your research. For most investors — and especially beginners — it’s smart to stick to established, popular coins like Bitcoin or Ethereum.

Crypto pump and dump schemes 

A small group of investors may pump a lot of money into a specific crypto, falsely inflating the price while convincing private investors to also invest. Then the original investors sell their shares for a profit before the price falls again. This type of scheme exists for more traditional investments, too.

Again, if an investment seems too good to be true, it probably is. Watch out for coins that have risen a lot in value without any clear reason why, the Crypto Head report recommends. This may be a sign of a pump and dump scheme.

How to Keep Your Bitcoin Safe

Hackers can gain access to individuals’ crypto wallets or breach entire cryptocurrency exchanges to steal their holdings. That’s why it’s essential to store your crypto in a safe place, and practice good digital security habits.

Cryptocurrency exchanges and third parties offer storage for your coins through hot wallets, which are secure, but still online (and therefore still susceptible to hacking). Crypto held on an exchange or in a wallet is not FDIC-insured like money in the bank. Make sure you trade and hold your crypto on a platform that offers robust security measures — including keeping a significant amount of holdings in its own cold storage and two-factor authentication for users. Some exchanges may even have private insurance policies in case of theft or hacking.

For the best protection against online fraud, many experts recommend cold storage through an offline device not connected to the internet, similar to a USB drive. But even cold storage comes with risks, like the possibility of losing access to your investment completely if you forget your password. 

(READ MORE: A Crypto Wallet Can Help Keep Your Coins Safe. Here’s How to Decide If You Need One)

Security vs. Privacy 

While you can take measures to secure your crypto holdings from hacking and theft, Bitcoin may not be any more effective at keeping your personal information private than any other traditional investment. 

“Security and privacy are two separate topics,” says Kiana Danial, author of “Cryptocurrency Investing for Dummies” and the personality behind @Investdiva on Instagram.

While trades you make in Bitcoin may be harder to trace than credit card purchases or direct bank withdrawals, Bitcoin transactions are not private. Bitcoin trades are tied to a hash code — a string of letters and numbers —  that are unique to you, says Ollie Leech, learn editor at CoinDesk, a leading cryptocurrency news outlet.  

“You’re really not anonymous, more like pseudonymous,” says Galen Moore, director of data and indexes at CoinDesk. While your activity isn’t directly tied to personal details like your social security number, the blockchain is public and there are ways that people can identify you.  

But even though Bitcoin transactions aren’t private, that doesn’t mean every user can see exactly how much everyone else has bought or sold. 

“In order to download the Bitcoin blockchain you would need massive, massive, computing capacity, like a supercomputer,” says Danial. “The day-to-day average Joe can’t go in and see what transactions are happening in the Bitcoin blockchain.” 

If you want total privacy when you transact, then neither Bitcoin nor Ethereum — the second largest cryptocurrency by market capitalization — are for you. Other smaller cryptocurrencies are designed for this total privacy, though experts recommend avoiding these lesser known cryptos as an investment.

(READ MORE: Ethereum: What You Should Know Before You Invest)

“With Bitcoin and Ethereum, all those transaction details being open is part of how the network is maintained as people watch,” says Moore. The open system helps the blockchain retain accountability. 

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While there are big companies that do accept cryptocurrencies as payments, Amazon is not one of them, perhaps because of its unpredictable volatility. Yet the company is about to change its attitude towards cryptocurrencies and even plans to develop a special cryptocurrency and blockchain strategy. 

Business Insider has found an Amazon job listing that seeks a leader who will develop the retailer's Digital Currency and Blockchain strategy as well as a product roadmap. The future employee of Amazon will be a part of The Amazon Payment Acceptance & Experience Team is responsible for 'how Amazon’s customers pay on Amazon’s sites and through Amazon’s services around the globe,' which pretty much implies that one of the world's biggest retailers will start accepting cryptocurrency as payments sometimes in the future. 

Indeed, Amazon has confirmed to Business Insider that it is going to accept cryptocurrencies, but did not reveal when exactly this is set to happen.  

"We are inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon," a statement by Amazon reads. "We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible." 

Amazon used to be pretty sceptic about cryptocurrencies back in 2017 due to lack of demand, but as more people start using cryptocurrencies to keep their savings or make investments, there are obviously enough parties interested in using various digital coins for payments and avoid their conversion to real money. 

What remains to be seen is how Amazon plans to mitigate volatility of cryptocurrencies like Bitcoin that can fluctuate significantly even during a week. Perhaps, the company will simply convert Bitcoins to real money quickly. Alternatively, it may attempt to make some additional profits by waiting till a digital currency goes up in price. 

But no matter what Amazon will do with cryptocurrencies it gets as payments, the very idea that such a large retailer will accept cryptocurrencies increases their value and makes some of the holders richer. 

A virtual currency guidance and advisory issued by the U.S. Treasury Department’s anti-money laundering (AML) unit on June 30, 2021 clarified regulatory expectations, riled some cryptocurrency players and signaled a potential new global standard for combating financial crime.

The statement added that the guidance “does not establish any new regulatory expectations” and “consolidates current FinCEN regulations, guidance and administrative rulings.” FinCEN has broad international reach to any business doing substantive business with U.S. persons and therefore international businesses need to be paying attention if they source cryptocurrency from U.S. exchanges or interact with U.S. consumers.

Any time FinCEN issues an advisory, compliance officers in both banks and virtual currency companies will spend a fair amount of time over the next few days reviewing the advisory in the context of their businesses and customers. Concerns include another round of bank account closures, not because customers are engaging in illegal activity, but because compliance officers and managers lack an understanding of the technology underlying cryptocurrencies as the easy way out rather than invest the time and effort to learn more about the space.

           Although owners of blockchain based investments most commonly hold cryptocurrency, blockchain technology is expanding into non-currency areas. In both, however, there are risks mainly because 1) estate planners and family members are ill-informed about the presence and nature of blockchain assets,  2) clients fail to realize that wills and trusts must have specific language to allow Personal Representatives and Trustees to manage those assets after incapacity or death, and 3) the regulatory environment, taxation, reporting, application if intestacy laws and other issues have yet to be resolved.

Traditional planning entities also have a hard time owning cryptocurrency, especially if there is a fiduciary duty owed to beneficiaries to prudently invest assets.  Without specific language, a trust or other entity will not be able to hold cryptocurrency, but if that language is written too broadly, the fiduciary may be exempt from damages due to willful neglect. Also, cryptocurrency is treated as property rather than as currency by tax authorities for tax purposes meaning that the fair market value is set by conversion into the taxing authority’s currently, that is U.S. dollars for the IRS, at “a reasonable exchange rate” and transactions involving cryptocurrency are subject to the capital gains tax regulations. This can result in the cryptocurrency being taxed at one value in one country and another value in another country. 

On top of all this, care needs to be taken to preserve the benefits of cryptocurrency. Cryptocurrency is highly secure, but that security is in jeopardy if the private key or seed phrase is carelessly recorded. With the right private key or seed phrase, anyone can access the cryptocurrency, so planning and procedures have to include how to secure this information. Like cash, cryptocurrency is not traceable. There is no electronic or paper trail linking the parties together in a transaction involving cryptocurrency. To preserve that privacy, you will need to plan that other documentation in the transaction does not reveal these identities, or at least that information is privileged. Shorter transfer delay and lower costs. Unlike hard currency, transferring cryptocurrency takes only moments and there are few, if any, transfer costs. 

So, what to do? First, educate your estate planner and family about any blockchain based assets, especially cryptocurrency, you own. If the value of those assets exceeds $10,000, and the assets are in custody with a fiduciary or institution that is “offshore” Make sure that you are also reporting that investment annually and that the custodian that holds the assets has the capacity to invest the time and effort required to comply with the myriad changes as they occur.

As a fourth generation estate attorney and managing partner of Erskine & Erskine LLC, I provide creative estate and strategic tax planning for business owners,

As a fourth generation estate attorney and managing partner of Erskine & Erskine LLC, I provide creative estate and strategic tax planning for business owners, collectors, and their families.My true passion is customized planning for collections as well as legacy real estate and family businesses. A love for history and the law drive me to achieve the objectives of security, satisfaction, and growth. Counseling families since 1876, our firm has provided me great perspective in this area of law. Utilizing tools like personal trusts, dynasty trusts, private foundations, and family offices is our specialty. Based in the Worcester, Massachusetts area, I am an active member of the American Antiquarian Society, Worcester Economics Club, and the John J. Kittredge Numismatic Foundation. A Lawrence Academy alumnus, I received my B.A. in Medieval History from Carleton College, and J.D. from Suffolk University Law School.

A portfolio strategist for American financial services firm Morningstar says that cardano could become a mainstream cryptocurrency alongside bitcoin and ether, forming a “big three” of mainstream cryptocurrencies.

Amy Arnott, a cryptocurrency-focused portfolio strategist at Morningstar, shared her views on crypto regulation, ether, and cardano in an interview with the Insider last week.

Noting that since many cryptocurrencies are not cash-generating, Arnott said it is difficult to determine a suitable price for them. However, she explained that ether has an in-built price to an extent because it is used to power decentralized finance (defi) transactions and support non-fungible tokens (NFTs). The strategist elaborated:

The fact that ether is used as a utility should provide some sort of price floor, but I’m not sure what that should be. A lot of people talk about a network effect where these currencies become more valuable as they are used more and there are more interdependencies and connections.

Arnott also believes that cardano (ADA) is a promising cryptocurrency that could join bitcoin and ether to form a “big three” of mainstream cryptocurrencies. She elaborated:

Cardano is similar to ethereum in that it’s a protocol that has a lot of potential technical applications. There’s a lot of enthusiasm about cardano, and also various stablecoins.

The Morningstar strategist continued to share her view on the institutional adoption of cryptocurrencies. “The interesting thing that’s happened over the past year or so is that institutional investors have been far more willing to adopt cryptocurrencies and look at them as an investment asset. As that trend continues we’ll see other cryptocurrencies become more mainstream,” she opined.

She noted that she would really like to see a diversified cryptocurrency index fund in the form of an exchange-traded fund (ETF). However, the U.S. Securities and Exchange Commission (SEC) still has not approved any crypto ETF, making it “very difficult for mainstream investors to gain exposure to cryptocurrencies.” Arnott opined:

Regulatory risk is a big issue – that’s been the driving factor behind a lot of the volatility over the past few months. If governments around the world clamp down on crypto in general, or bitcoin and ether specifically, that would be a large negative.

What do you think about the comments by the Morningstar strategist? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Bitcoin (BTC) is trading above its 50-day simple moving average for the first time since May 12. The trading range since May 19 is from a high of 41,323.05 set on June 15 to a low of 28,800.01 on June 22, down 30.3%. The upside from this low reached its semiannual pivot at 35,643.29 on June 29. A secondary low of 30,400.00 was set on July 19. From this low bitcoin is now trading back and forth around its 50-day simple moving average at 34,183.35.

If bitcoin can stay above 34,183.35 the upside is to its semiannual and weekly risky levels at 35,643.29 and 36,863.07. Even with this upside, its weekly chart stays negative given a close on Friday, July 30 below its five-week modified moving average at 36,162.14.

The Daily Chart for Bitcoin

Bitcoin has been trading above a golden cross since May 26, 2020, when the 50-day simple moving average—then at 8,322.00—rose above the 200-day simple moving average at 8,052.43. Notice how the 50-day SMA was a buy level at 29,252.24 on January 27. The next time the 50-day SMA was tested it was 50,951.90 on March 25. On April 18, bitcoin closed at 55,550.00, below the 50-day SMA at 56,252.44.

Bitcoin traded below its 200-day SMA at 39,763.27 on May 19. The trading range since then has been down from 41,323.06 on June 15 to 28,800.01 on June 22.

The horizontal line at the top of the graph is this month’s risky level at 62,927.95. The horizontal line at the bottom of the chart is the annual value level at 18,892.52, which is the overall downside risk.

The three horizonal lines within the trading range are the weekly risky level at 36,863.07, the semiannual risky level at 35,643.29, and the quarterly pivot at 32,802.94.

The Weekly Chart for Bitcoin

The weekly chart for bitcoin is negative but oversold and is below its five-week modified moving average at 36,216.42. It’s well above its 200-week simple moving average or reversion to the mean at 13,939.59.

The last two longer-term buying opportunities came during the weeks of March 15, 2020 and the week of August 2. On March 15, bitcoin tested its 200-day SMA then at 5,540.89. On August 2 bitcoin broke above the down trend line at 10,128.28.

Trading Strategy: Buy bitcoin on weakness to its quarterly pivot at 32,802.94 and reduce holdings on strength to its semiannual and weekly pivots at 35,643.29 and 36,863.07.

Richard Henry Suttmeier is CEO and founder of Global Market Consultants, Ltd and a contributor to Forbes and Investopedia.com. Rich got his engineering degree from

Richard Henry Suttmeier is CEO and founder of Global Market Consultants, Ltd and a contributor to Forbes and Investopedia.com. Rich got his engineering degree from Georgia Tech and Masters from Brooklyn Poly. He has nearly 50 years experience as a trader, trading manager and research analyst at firms such as Bache and LF Rothschild, where he established that firm as a primary dealer in 1986. Writing research since 1984, he's been a market strategist at firms such as Smith Barney and William R. Hough. He's been a speaker for the Market Technicians Association, the American Association of Individual Investors, Wells Fargo Advisors, the Executive Forum at the National Arts Club, and Investors Roundtable of Wilmington N.C.  

In what appears to be a first for the American government, the U.S. Department of State is offering to pay a cryptocurrency bounty worth up to $10m (315BTC at the time of writing) in return for actionable intelligence about cyberattacks orchestrated by foreign governments.

The federal agency, acting through the Rewards for Justice program operated by the Diplomatic Security Service, made the offer in a July 15th press statement.

It said the payment would be provided to anyone who can give “information leading to the identification or location of any person who, while acting at the direction or under the control of a foreign government, participates in malicious cyber activities against U.S. critical infrastructure”.

The press statement then added: “Reward payments may include payments in cryptocurrency.”

An agency spokesperson confirmed to a taken-aback Coindesk that this does, indeed, mark “the first time since its establishment in 1984 that the Rewards for Justice program has offered a reward payment in cryptocurrency”.

More significantly, it appears to be the first time that any organ of the U.S. federal government has taken the plunge. Most-wanted lists with cash rewards are also maintained by the Federal Bureau of Investigation (FBI) and the U.S. Immigration and Customs Enforcement (ICE) agency, but to date neither body has publicly offered to make payments in cryptocurrency (including when the fugitive is wanted in connection with crimes related to cryptocurrency).

For bitcoin enthusiasts, the news may be seen as an admission by the U.S. government that decentralized cryptocurrencies are a viable means of conducting state business.

That’s probably reading too much into it. In order to be eligible for the $10m reward, you would almost certainly need to be a Russian or Chinese hacker who is willing to commit treason by passing intelligence about your activities and chain of command to a hostile Western government.

The U.S. Diplomatic Security Service will be acutely aware that anyone engaging with its Rewards for Justice program is putting their life at risk, so the decision to offer payments in cryptocurrency appears to be largely pragmatic. Most cryptocurrencies are transacted over public blockchain networks that offer more anonymity and less traceability than traditional payment channels.

Informants have also been asked to initiate contact via an anonymized Tor channel on the Dark Web–not exactly routine government protocol.

Nonetheless, it is of historical significance that the U.S. federal government is now offering to pay for services–funded by taxpayer dollars–with cryptocurrencies that exist outside the influence of central banks and other state institutions.

That should lay to rest any lingering doubts some people have about the security of bitcoin, which is cryptographically unbreakable and can only be seized when stored improperly by entrusting it to third parties.

If adopted as broader government policy, the approach should also result in a healthy up-tick in intelligence tip-offs.

Earlier this month, a coordinated ransomware attack originating in Russia disrupted the operations of more than 1,000 companies using IT infrastructure provided by U.S. firm Kaseya. Cybercrime costs the global economy more than $1tr per year–about 1% of global GDP–according to software security firm McAfee.

I am an aviation journalist turned crypto reporter whose work has appeared in The Guardian, The Economist, The New York Times, Flightglobal, African Business, Al Arabiya

I am an aviation journalist turned crypto reporter whose work has appeared in The Guardian, The Economist, The New York Times, Flightglobal, African Business, Al Arabiya & New Eastern Europe. I first became interested in bitcoin in 2013, but only changed career in 2021 after realizing the network's true potential to democratize finance–particularly in the developing world. My work exposes and debunks the endemic misinformation spread about bitcoin by mainstream media outlets, multinational organizations and legacy financial institutions. I also cover technical analysis and corporate adoption of blockchain technology. I believe bitcoin is humanity's best weapon in the fight against inequality. (Financial disclosure: I currently have bitcoin & Ampleforth holdings.)

Amazon’s Payments Acceptance & Experience team is hiring a digital currency and blockchain expert to develop the company’s digital currency and blockchain strategy and product roadmap, including a launch strategy. “We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon,” the company’s spokesperson said.

Amazon has posted a job opening for a “Digital Currency and Blockchain Product Lead.” The job posting explains that “The Amazon Payment Acceptance & Experience Team is responsible for how Amazon’s customers pay on Amazon’s sites and through Amazon’s services around the globe,” elaborating:

The Payments Acceptance & Experience team is seeking an experienced product leader to develop Amazon’s digital currency and blockchain strategy and product roadmap.

The company further described: “You will leverage your domain expertise in blockchain, distributed ledger, central bank digital currencies and cryptocurrency to develop the case for the capabilities which should be developed, drive overall vision and product strategy, and gain leadership buy-in and investment for new capabilities.”

Among the basic qualifications required for the role is a “Deep understanding of the digital / cryptocurrency ecosystem and related technologies.”

The posting adds: “You will work closely with teams across Amazon including AWS to develop the roadmap including the customer experience, technical strategy and capabilities as well as the launch strategy.”

Confirming the job posting to CNBC, an Amazon spokesperson said in a statement:

We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon.

“We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible,” the spokesperson noted.

Amazon Web Services currently offers a service called managed blockchain but Amazon does not currently accept bitcoin or other cryptocurrencies as payment for its products.

Do you think Amazon will soon accept crypto payments? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Bitwise Asset Management CIO Matt Hougan on the price of Bitcoin climbing back above 30,000 and how ‘positive regulation’ could impact the crypto market.

Bitcoin was trading more than 4% higher early Thursday morning.

The price was around $32,180 per coin, while rival Ethereum was up 7% at 2,004 and Dogecoin was higher by15% at 24 cents per coin, according to Coindesk.

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Elon Musk's latest comments are helping to give bitcoin and other cryptocurrencies a boost.

The Tesla CEO says the electric-car maker will most likely restart accepting bitcoin as payments once it conducts due diligence on the amount of renewable energy used to mine the currency, according to Reuters.

Musk made the comments at the B Word conference on Wednesday sending the price of bitcoin as high as 8%.

It is another turnaround after Tesla said in May it would stop accepting bitcoin for car purchases.

"I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin" Musk said.

ELON MUSK OWNS THESE 3 CRYPTOCURRENCIES

Musk added that he personally owned bitcoin, ethereum and dogecoin, apart from bitcoin that Tesla and SpaceX owned.

In other cryptocurrency news, Core Scientific Holding Co said on Wednesday it would go public through a merger with a blank-check company backed by BlackRock Inc, in a deal that values the cryptocurrency miner at $4.3 billion.

Core Scientific said it had mined 928 bitcoins in the second quarter and forecast revenues of $493 million and $1.1 billion for fiscal 2021 and 2022, respectively, according to Reuters.

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The company said it was 100% net carbon neutral and aims to remain so as it grows. 

Special purpose acquisition company (SPAC) Power & Digital raised $345 million in an upsized initial public offering in February.

The U.S. Internal Revenue Service (IRS) has modified the crypto question asked on the main U.S. tax form. Reducing the scope of the question, the IRS now focuses on taxable cryptocurrency transactions.

The IRS published a draft Form 1040 for the tax year 2021 Thursday. Form 1040 is the main tax form used for filing individual income tax returns in the U.S. The draft form shows that the tax agency has modified the crypto question slightly.

The crypto question now reads: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

Previously, the question read: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

For the year 2021, the IRS has removed the word “send” and replaced “acquire” with “disposed of.”

Shehan Chandrasekera, Head of Tax Strategy at tax software company Cointracker, explained that “The revised question only inquires about your taxable transactions compared to the much broader scope of the 2020 version.”

He opined, “Although these changes have no big impact on your taxes, it hints at what the IRS has learned from the 2020 version and the direction it’s heading,” elaborating:

Under the revised question, you don’t have to check ‘Yes’ if you send cryptocurrency in between wallets/exchanges or acquire them, which are both non-taxable transactions.

What do you think about the new crypto question on the tax form? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

More than 1 in 10 Americans invested in cryptocurrency over the past year, according to a survey published by the University of Chicago.

The growing popularity of digital currencies such as bitcoin and ethereum was likely spurred by the surge in crypto prices. In fact, most crypto investors (61%) bought in over the past six months, according to NORC. 

Cryptocurrency is also gaining popularity among women and investors of color over traditional stocks.

Angela Fontes, a vice president in the Economics, Justice, and Society department at NORC at the University of Chicago, said in a statement that cryptocurrencies are opening up investment opportunities for more diverse investors, which she describes as “a very good thing.”

“It will be important that these investors have access to sound information as they make decisions related to these often more volatile investments,” Fontes said.

Bitcoin hit a high of around $63,000 in mid-April, a 116% jump from about $29,000 at the beginning of 2021, CNBC reported. 

The survey found that crypto investors tend to be younger, and more diverse in terms of gender and race and ethnicity, relative to retail stock investors.

The average crypto investor is 38 years old, whereas stock investors are 47

As celeb-fronted campaigns bring cryptocurrency into the mainstream, is it time for clearer regulation of ads?

A harsh spotlight was shone on cryptocurrency ads this month. The UK’s ad regulator the ASA has said that it now will better police cryptocurrency content while TikTok has issued a warning to creators that it will not tolerate promotion of the divisive digital currency. At the same time, Google and Facebook appear to be opening the gate to more advertising from crypto companies having previously banned all ads. And even ads that do make it to air on the big screen have been quick to face criticism from the general public, wiser to the pitfalls of the crypto boom.

When Spike Lee – the famed director behind films like ‘Malcolm X’ – appeared on screens last week extolling the benefits of why “old money is out, new money is in” in a campaign for crypto ATM operator Coin Base, he faced a swathe of criticism for failing to spot the hypocrisies.

Lauding Bitcoin et al as “the digital rebellion” against a financial system that “systematically oppresses” people of color and women, he marched through Wall Street denouncing archaic financial systems and encouraging the nation to cash in their dollars for cryptocurrency.

“Do your research,” Lee says between hyperbole. Is it a warning? If not, it should be.

According to the Federal Deposit Insurance Corporation, 5.4% of US households do not have a bank account, with the primary reason being a lack of sufficient funds to open one.

Yet these 20 million Americans appear to be the exact target audience that Lee was encouraging to rush to a Coin Base ATM to exchange their “old money” for a new currency that’s “inclusive and fluid”.

Critics were quick to highlight that this group, arguably more than any other, is susceptible to the promise of making a quick buck without proper consideration for the risks involved with investing in something as volatile as cryptocurrency.

According to Glassnode, between May 17 and May 24, Bitcoin holders realized net losses of $2.56bn. Glassnode says most of these sellers were new ‘bitcoiners’ who had acquired and subsequently sold the currency within the past three to six months.

In a survey of UK consumers conducted by behavioral finance experts Oxford Risk, 36% cryptocurrency investors admit their understanding of the sector was poor or non-existent.

But emotional factors such as the ‘fear of missing out‘ are driving growth, with around 35% of adults saying they have read a lot about huge price rises while 15% say they have been encouraged to buy by friends or family.

Spike Lee isn’t the only celebrity to lend his star-power to cryptocurrency ads.

In the past, crypto companies had been used to marketing their products on pockets of the internet – Telegram groups, online chatrooms and invitation-only forums. But as Bitcoin hit headlines, large investors like Tesla and Square backed various Coins, and financial giants like BNY Mellon, Visa and Mastercard revised their policies to support crypto projects, the crypto sector began to experiment with mainstream advertising. And their marketing pockets are deep if the calibre of celebs they've signed on to front major ad campaigns is anything to go by.

Actor Neil Patrick Harris has bragged of the benefits of being an early Bitcoin investo for a CoinFlip campaign, Alec Baldwin has mocked those who think trading crypto on Etoro should be anything other that quick and easy, while Tom Brady and Gisele Bündchen have become brand ambassadors for FTX to encourage adoption of the digital currency.

These companies are also spending big on digital advertising, specifically with social media influencers.

Internet sensation Kim Kardashian West promoted Ethereummax – a so-called alternative-coin, or ‘alt-coin’, to the more established Bitcoin – to her 228 million Instagram followers last month.

Over on TikTok, young stars Charli and Dixie D’Amelio turned their combined 169 million followers’ attentions to cryptocurrency exchange Gemini as part of a sponsored campaign. In fact, the use of influencers by crypto companies on TikTok was so widespread they were given the moniker ‘Fintok advisors’.

But concern has been mounting within the walls of advertising regulators over the lack of scrutiny given to cryptocurrency ads, especially those targeting a young and financially naive audience.

The Advertising Standards Authority (ASA) in the UK recently said that it would be taking a more serious look at any crypto advertising. It came following the ban of an OOH campaign from UK-based exchange Luno, which ran a series of ads reading: “If you’re seeing Bitcoin on the Underground, it’s time to buy.”

The watchdog said it plans to offer guidance for companies in the coming weeks, and is ”considering whether further action is needed” around social media influencers promoting investments in the space without disclosing enough about the risks.

Further afield, the Advertising Standards Council of India (ASCI) said this week that it was looking into the rise of crypto ads after identifying it as an “emerging area of concern”.

But it’s slow progress. Arguably too slow for the fast paced nature of this sector, where scams and fraud are all too common.

”It is inevitable that digital asset investments and crypto currency ads in particular will face greater scrutiny and tighter regulation. It’s really a case of slow regulators catching up with fast-developing technology and greater public awareness,” says Rafe Blandford, chief product officer at Digitas UK .

“Focus is sharper on this sector because of the associated consumer risk with any investment instrument, especially in what currently feels like a Wild West atmosphere. Because country by country legislation can be slow, we can expect to see ad networks enacting their own policies and self-regulation.”

Atomic London is an advertising agency that counts Etoro – a trading platform that lists numerous cryptocurrencies – among its clients.

The agency‘s chief executive Jon Goulding said he is in no doubt that a clamp down in crypto advertising is coming. However, he raised concerns over how effective it would be when there remains no official regulation by the Financial Conduct Authority (FCA), agreeing with Blandford that ultimately we’ll see a network-level stance taken, rather than anything government mandated.

"With most crypto currencies not regulated by the FCA, how are consumers really going to be protected?,” says Goulding. ”It comes down once again to whether digital and social media platforms will self-regulate and block crypto-advertisers from accessing their inventory and not simply whether there is an arbitrary ‘warning, you could lose all of your money’ as a small print alongside advertising messages.”

But rather than a move to stricter regulation of crypto advertising, it appears some digital and social platforms are slowly opening up to it.

Facebook – which owns Instagram – introduced a harsh crackdown back in 2018 with a blanket ban on crypto companies using its ad product. It has since lifted those restrictions to allow some adverts from pre-approved brands, and has no policy on its site in regards to influencers promoting crypto.

Like Facebook, Google had also previously taken a firm stance on crypto ads in an effort to clamp down on scams. But it appears to be loosening those restrictions for crypto exchanges and wallets, with reports emerging that it has invited potential advertisers to apply for commercial opportunities this month ahead of a change in policy in August.

“Given the track record of those platforms I don’t hold out much hope that they’ll suddenly start clamping down on it,” says Goulding. ”Ironically, when going on to digital publishers sites to look at articles relating to the ASA banning cryptocurrency advertising, the first pop up ad was for a cryptocurrency.”

TikTok, however, is getting tougher. Earlier this month it updated its content policy to ban – among other things – influencers from promoting cryptocurrency.

Aside from the platform, the ability for crypto brands to market to the masses may also come down to the ethical values of the advertising agencies they want to employ.

Many agencies have committed to AdNetZero to help the industry tackle the climate change emergency. Spearheaded by the Advertising Association, it‘s aiming to reduce the carbon impact of developing, producing and running UK advertising to real net zero by end 2030 and asking agencies to commit to make practical changes in the way they run their advertising operations.

”The environmental impact of crypto currencies is significant. Between start of 2016 and mid-2018 it’s estimated that crypto mining was responsible for up to 15 tons of carbon dioxide emissions. The most prominent crypto currencies – Bitcoin, Ethereum, Litecoin and Monero – used more electricity in 2017 than Ireland or Hong Kong,” says David Edwards, chief customer officer at AMV BBDO, suggesting that agencies may need to take a stand on bringing cryptocurrency brands on as clients.

“It’s estimated that for every $1 of Bitcoin value created it was responsible for creating $0.49 in health and climate change – otherwise known, I think, as cryptodamages. It seems sensible that there should be tighter advertising regulation until cryptocurrencies are subject to proper global regulations – with all the checks and balances in place regarding personal and environmental protections.”

Bitcoin and cryptocurrencies captured our rapt attention with their amazing gains, creating newly minted millionaires and billionaires. There’s also talk about the volatility associated with buying digital assets and the recent sell-off in Bitcoin, along with other coins. What’s left out of the conversation is the dire need for top talent to work at these fast-growing companies. 

The U.S. economy and job market have roared back to life. Businesses—ranging from small mom-and-pop restaurants to investment banks—are engaged in a heated war for talent. Companies complain that they can’t keep up with customer demands and find enough suitable workers to satiate their needs.  

The lack of experienced talent is particularly problematic within the turbo-charged crypto community. The exchanges need highly specialized professionals, such as software engineers, compliance, legal, risk management, marketing, sales and recruiting personnel to manage, scale their businesses and deal with the anticipatory tighter regulations and government oversight.

According to Bloomberg, crypto firms are finding it tough to find the appropriately skilled candidates for thousands of open roles across the world. This sector faces a number of challenges recruiting people. Since it's still an emerging area, there aren’t large numbers of job seekers with five or 10 years of relevant experience for the specific nature of most of the job openings. 

Some people are enamored with the space, but there is an equal—or larger—number of potential candidates that shy away from the crypto field. They are afraid of the unknown, concerned about career safety and would rather pursue more traditional roles. 

With cryptos going mainstream, there is now intense competition from major banks, investment banks, hedge funds, FinTechs and all sorts of other financial institutions. Apple, Facebook, Square, Tesla, MicroStrategy and other tech companies are looking to get in—or already are in—on the action. Even the country of El Salvador got in on the game, making Bitcoin legal tender. A large number of job openings seek software developers and engineers, and these folks are in high demand everywhere.

Frederick "Fred" Ernest Ehrsam III is an American business executive and investor who is the cofounder and managing partner of cryptocurrency investment firm Paradigm. He is also the cofounder of cryptocurrency exchange Coinbase. In an interview with Bloomberg, Ehrsam contends that the crypto industry has the potential to create as many or more jobs than the internet. 

A quick search on both Indeed and LinkedIn’s job boards shows thousands of listings for roles related to “bitcoin,” “cryptocurrency” and “blockchain.” Writer Sarah Butcher, in a piece for eFinancial, shares some crypto companies that are aggressively hiring.

Coinbase, the U.S.-based cryptocurrency exchange that recently went public, has been hiring from investment banks, like HSBC, Barclays and JPMorgan. At the end of last year, Coinbase employed 1,249 people globally. It plans to keep hiring “meaningfully" and currently has around 183 jobs open globally, including 26 for recruiters. 

Binance is one of the world’s largest cryptocurrency exchanges. Founded by Changpeng Zhao, a former head of Tradebook futures development at Bloomberg, Binance is currently advertising over 350 jobs globally. The job listings include software developers, data scientists, compliance, legal, marketing sales and human resources professionals around the world.

"We are hiring aggressively," Zhao, Binance CEO, told Bloomberg. He said, "We see the industry growing exponentially on a year-to-year basis, and we need to scale our team to cope with it," Zhao added, "We are a geo-equal-opportunity employer. We don't mind where people are, as long as they produce results." 

Blockchain.com runs a crypto exchange and says it's "rebuilding finance from the bottom up"  and is the "easiest and most powerful crypto wallet." The company has about 40 open headcounts, which could be based remotely. The jobs include low-latency developers, commonly found at high-frequency trading firms, data scientists, data analysts, quant developers, traders and even someone to work in M&A. 

BlockFi is a crypto-management platform that offers cryptocurrency trading, pays interest on cryptocurrencies and offers loans with crypto as collateral. It's currently hiring 100 people internationally, including both in-office and remote options.

Grayscale Investments, a crypto asset manager based in Stamford, Connecticut, seeks 15 people. The listings include positions for engineers and ETF professionals.

Anchorage Digital, the first federally chartered digital asset bank, has about 50 job openings globally, seeking traders, engineers and risk and compliance professionals. 

Gemini, the crypto exchange founded by the Winklevoss twins, has plans to increase hiring in Singapore. Crypto.com, based in Hong Kong, has over 200 openings—with more than half of them based in Asia.

To fight the war for talent, crypto firms are upping the compensation, promoting remote-work options across the globe and offering other incentives to entice people to join their companies.

I am a CEO, founder, and executive recruiter at one of the oldest and largest global search firms in my area of expertise, and have personally placed thousands of

I am a CEO, founder, and executive recruiter at one of the oldest and largest global search firms in my area of expertise, and have personally placed thousands of professionals with top-tier companies over the last 20-plus years. I am passionate about advocating for job seekers. In doing so, I have founded a start-up company, WeCruitr, where our mission is to make the job search more humane and enjoyable. As a proponent of career growth, I am excited to share my insider interviewing tips and career advancement secrets with you in an honest, straightforward, no-nonsense and entertaining manner. My career advice will cover everything you need to know, including helping you decide if you really should seek out a new opportunity, whether you are leaving for the wrong reasons, proven successful interviewing techniques, negotiating a salary and accepting an offer and a real-world understanding of how the hiring process actually works. My articles come from an experienced recruiter’s insider perspective.

MarketWatch has highlighted these products and services because we think readers will find them useful. We may earn a commission if you buy products through our links, but our recommendations are independent of any compensation that we may receive.

Investing in crypto may be easier and faster than ever — you can now opt to invest through online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase and Gemini— but it’s far from being a foolproof venture. Many of the same risks and pitfalls that vexed crypto pioneers can still cause headaches for those entering the field today. That’s not to say that navigating the crypto universe requires a masters in computer science or finance; rather, it just means that some of the financial resources, protections and patterns investors have come to expect when trading stocks and bonds will be different when trading crypto.  Learning the rules of this new digital investment game is essential and could potentially save you from making mistakes worth thousands, or even millions of dollars. Here are a few mistakes that new crypto investors often make when they get started, as well as some things to consider before taking the plunge.

If you decide to buy Bitcoin, make sure it’s the genuine article. One of the biggest mistakes new investors make is buying the wrong coin. Just because it has ‘Bitcoin’ in its name doesn’t mean it’s a Bitcoin. There’s Bitcoin Cash, Bitcoin Gold, Bitcoin SV, Bitcoin Private and dozens of other direct offshoots of the original cryptocurrency that have the word “Bitcoin” in its name. That’s not to say that these offshoots are bad or scams, it’s just that they aren’t the original Bitcoin that has become widely traded and quoted. But if you do buy the wrong coin, it isn’t the end of the world. You can always sell it back and buy the right one, hopefully at a profit.  

Ready to get into crypto? You can buy Bitcoin, Ethereum and other cryptocurrencies via online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini or eToro.

You’re going to need nerves of steel if you get into this space because the volatility is extreme. “Compared to the analog world or the traditional finance world, volatility is kind of off the charts,” Theresa Morrison, a certified financial planner in Arizona, told Marketwatch.

Morrison recommends that new investors commit a nominal sum at first, even as low as $50 a month, to an established cryptocurrency they understand, and then to forget about it. The swings in volatility are such that if an investor is constantly eyeing the market it could drive them crazy.  Furthermore, if you’re new to the crypto world, you may want to stick to cryptocurrencies that you know and understand at first. “I like my clients to look at established coins first – the ‘Blue Chips’ of crypto, if you will, namely Bitcoin and Ethereum,” says Erik Goodge, an independent certified financial planner based in Indiana.

Believe it or not, many new and veteran cryptocurrency traders have lost money sending their coins to the wrong place. Unlike a bank wire transfer that can be halted or a check that can be canceled, there’s often no recourse if you make a fat-finger error. 

“I got a good buddy who was trading Stablecoins and he sent USDT to a USDC address and lost $4,000,” Adam Blumberg, a financial planner in Houston, recounted. “He texted me saying that this transaction is two days old and he doesn’t know what’s going on. When he sent me the transaction I told him he had accidentally sent it to a USDC account and asked me if he could call them to fix it and I was like ‘no, it’s gone – you should have called me first before you did this.’”

Ready to get into crypto? You can buy Bitcoin, Ethereum and other cryptocurrencies via online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini or eToro.

While there will only be 21 million Bitcoins that will ever be mined, less will trade because many of them are simply lost forever as people have forgotten the passwords to their digital wallet. You often can’t call somebody to reset your password, if you forget it or lose it then you’re locked out. Around 20% of the Bitcoins mined so far are lost in stranded wallets, according to Chainalysis, a cryptocurrency data firm. Therefore, how you store your password is critical and needs to be thought out in advance before you start trading. Writing it down on a piece of paper is the first step but even that has its own concerns as it can then be stolen and used by someone else. Also, paper is not the most durable material. “I have clients who wrote down their passwords and kept them in a special place in their house,” Blumberg said. “But a couple of years ago, when Houston was hit with those terrible floods,” many of those carefully hidden passwords dissolved in swamp water.

Blumberg recommends putting the password in a flood-safe and fire-proof container or keeping it in a bank safety deposit box. As an alternative to writing it on paper, he has seen some clients get their passwords stamped on metal that can resist the elements.

Ready to get into crypto? You can buy Bitcoin, Ethereum and other cryptocurrencies via online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini or eToro.

About the author: Cyrus Sanati has been a financial journalist and columnist for nearly two decades, covering a wide variety of topics from the energy markets to digital currencies. His work can be seen in a variety of publications, including The Wall Street Journal, The New York Times, Fortune Magazine and Breakingviews. He is a graduate of UCLA and earned post-graduate degrees in journalism and business from Columbia University. 

Also see: What you need to know to start investing in cryptocurrency right now

The U.S. government this week laid more groundwork for potential future cryptocurrency regulation.

Federal Reserve Chairman Jerome Powell spoke Wednesday, July 14 about the Fed’s interest in regulating stablecoins and the potential for a central bank digital currency (CBDC), while testifying before the U.S. House Committee on Financial Services.

Stablecoins (Tether and USD Coin, for example) are a category of cryptocurrencies that peg their value to an existing fiat currency, like the U.S. dollar. That helps stabilize their value, so they’re better suited for digital payments — unlike more volatile digital assets like Bitcoin. Ideally, these coins are underwritten by a reserve of the currency they’re tied to, but today there’s little official regulation enforcing that.  

Powell compared them to money market funds or bank deposits, which have a strong regulatory framework in the United States. “That doesn’t exist for stablecoins,” he said. “And if they’re going to be a significant part of the payments universe — which we don’t think crypto assets will be, but stablecoins might be —  then we need an appropriate regulatory framework, which frankly we don’t have.”  What Does This Mean for Crypto Investors?

Experts we’ve spoken to largely agree that long-term crypto investors should stick with well-known cryptocurrencies like Bitcoin and Ethereum. Unless you’re doing more active trading — and are comfortable with the risks of buying lesser-known coins — the two most popular currencies are the best options for most people.

Regulation like what Powell is talking about is more likely to impact stablecoins and other smaller altcoins, experts say. “They have different use cases,” says Mike Uehlein, founder and financial planner at WealthU Advisors, referring to Bitcoin versus stablecoins. 

If Bitcoin is “digital gold,” stablecoins are more comparable to the current money system, he says, having an infinite supply and centralization. Bitcoin is a store of potential value, while stablecoins are better suited for digital transactions and converting digital assets to and from “real” money.

“Investors buying Bitcoin as a store of value and buying stablecoins for a store of value are two different things,” says Tyrone Ross, a financial advisor and CEO of Onramp Invest, a cryptocurrency platform for other financial advisors. A central bank-backed digital currency would be a market competitor for stablecoins, but not Bitcoin, Ross says. 

Still, any new regulation has potential to affect your portfolio. 

While stablecoin regulation or a CBDC may not have a direct effect on Bitcoin — which is decentralized and operated by users across the globe —  it is likely regulation could bring more volatility to the crypto market. Already, we’ve seen crackdowns on cryptocurrency regulation from China play a role in Bitcoin’s recent $30,000 price drop. We’ve also seen how the price of coins often follow each other — when Bitcoin’s price takes a hit, altcoins often follow. Regulation could eliminate many cryptocurrencies available today, Uehlein says. 

Still, the regulations Powell mentioned would likely have a much bigger impact on the value of stablecoins or smaller altcoins, rather than Bitcoin. “DeFi, stablecoins, and other things are ripe for regulatory scrutiny,” Ross says. “Don’t make large bets in the space now, and stay educated on recent developments and news.”Why Regulate Stablecoins?

Because crypto trading and prices move very quickly, stablecoins can help traders move their funds within an exchange faster than if they were depositing cash from a bank account. Trading coins for actual dollars in and out of your bank account could take several days (and charge higher fees) than exchanging a coin for a stablecoin.

But without regulation, even these coins are risky. 

“Stablecoins are currently used as a replacement for the U.S. dollar, pegged 1:1 with the dollar,” Uehlein says. “Verifying this peg has been in question for many investors and regulators. Many investors would feel better knowing the dollars are backed by the U.S. treasury.” And that’s where a potential U.S. government-issued digital currency comes in — since it would have that backing.

What’s the Purpose of a Central Bank Digital Currency?

Powell’s testimony also reiterated the Fed’s interest in a central bank digital currency for the United States. A CBDC would make it easier to make transactions digitally. Because it would (hypothetically) work on a blockchain network, those transactions would also be secure and much faster than money transfers are today. 

While it’s generally unwise to use crypto to make a purchase, that’s exactly the purpose a potential central bank digital currency could serve. “A fed-backed CBDC could replace stablecoins such as Tether or USDC,” Uehlein says. 

As far as any real implementation of a CBDC, both Fed officials and the experts we spoke to believe there’s a long way to go before we reach that point, at least in the United States. While he says he’s very interested in seeing how CBDCs in countries across the world continue to evolve, Uehlein says “it is too soon to tell how serious the U.S. is about a CBDC.”

What’s Next In Crypto Regulation?

Now, all eyes are on a coming report from the Federal Reserve, which Powell expects to publish around early September.

“We’re going to address digital payments broadly,” he told the committee. “So that means stablecoins, it means crypto assets, it means CBDC. That whole group of issues and payment mechanisms, which we think we’re really at a critical point in terms of the appropriate regulation.” 

In addition, the Fed plans to ask the public about the risks and benefits of cryptocurrency and a potential CBDC, alongside consultation with national groups, including Congress. The purpose of the report, Powell said, is “to lay out the possible potential benefits and also the potential risks” of a central bank digital currency, and how regulators might weigh those costs and benefits. 

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Before Spike Lee accepted cryptocurrency, he turned down Crocs.

Years ago, the filmmaker rejected an offer to buy into the Colorado company that makes perforated foam clogs, a decision that caused him to miss out when its stock soared on the strength of the footwear fad.

“I wish I would’ve given some money back then,” Mr. Lee said in a recent interview. “Anytime something is new, you’re going to have people who are going to be skeptical. With some of the best ideas, people thought the inventors were crazy.”

Now he has taken a leap into another cultural craze, having agreed to direct and star in a television commercial for Coin Cloud, a company that makes kiosks for buying and selling Bitcoin and other virtual currencies. Although cryptocurrency is not widely used for transactions, an increasing number of merchants now accept it as payment.

The commercial, which he shot last month, is one of several recent marketing efforts meant to broaden the audience for a form of currency that can intimidate people accustomed to cash and credit cards.

Mr. Lee, outfitted nattily in a straw hat and gold-tipped cane while filming part of the commercial on Wall Street, led a diverse cast that included his daughter Satchel, the “Pose” actress Mj Rodriguez and the drag queen Shangela. Other shoot locations included Fort Greene Park and the Chillin’ Bar and Grill in Washington Heights, where breakfast patrons craned to catch a glimpse of the director as he filmed a Coin Cloud machine on the sidewalk.

“Old money is not going to pick us up; it pushes us down,” Mr. Lee says in the commercial, which portrays the cryptocurrency system as a more accessible and equitable alternative to traditional, discriminatory financial institutions.

“The digital rebellion is here,” he says.

Cryptocurrency has also been known to intimidate investors, with its extreme volatility and the overwhelming number of virtual alternatives, known as coins. The marketing of this relatively new money has so far been limited mostly to ads on trade websites and targeted pushes on social media, where aficionados swap meme-fueled in-jokes about coin values rocketing to the moon.

The industry is increasingly betting that celebrities can help demystify cryptocurrency for the uninitiated.

The actor Alec Baldwin offered crisp definitions of cryptocurrency in a series of online ads for the crypto trading platform eToro, and the National Football League star Tom Brady signed on as a brand ambassador for FTX, a crypto exchange that also has a deal to sponsor Major League Baseball.

The actor Neil Patrick Harris recently appeared in a TV commercial for the digital currency kiosk operator CoinFlip. “Now anyone, anywhere, can turn cash into crypto!” he declares.

EToro and Coinbase, another exchange, collectively spent $22.8 million on advertising last year, nearly double the $12.4 million they shelled out in 2019, according to the research firm Kantar. In recent months, Coinbase hired the Martin Agency, the advertising company behind GEICO and DoorDash.

As Madison Avenue fields more inquiries from cryptocurrency clients, agency executives are feeling pressure to better communicate the investment risks, rather than romanticize the industry.

“I get very nervous because I start looking at the way that some of the platforms are specifically targeting younger investors,” said Alex Hesz, the chief strategy officer of the advertising giant DDB Worldwide.

In the face of frenzied cryptocurrency trading, ad agencies should push for moderation and diversification, he said.

“Maximizing is what’s being encouraged here — the idea that this is an amazing asset, and as much as you want to put in, come on and jump on in, the Bitcoin’s lovely,” Mr. Hesz said. “We would never feel comfortable for an alcohol client, or a high-salt or high-sugar or high-fat client, to encourage that level of unequivocal behavior.”

Some celebrity endorsements of cryptocurrencies have run into trouble. In 2017, the Securities and Exchange Commission cautioned that some famous people were hyping the virtual currency sales known as initial coin offerings without disclosing that they had been paid to promote them. The commission has since settled charges against the boxer Floyd Mayweather Jr., the music producer DJ Khaled and the actor Steven Seagal.

Social media influencers and e-sports stars have also been linked to shady cryptocurrency schemes, accused of pumping up coins just before their value crashes.

Coin Cloud’s chief marketing officer, Amondo Redmond, said he hoped Mr. Lee’s stature would help elevate the industry by delivering something “more than just cool creative, but that is really at the forefront of digital currency becoming mainstream.”

“It’s more than just adding a celebrity face,” he said.

Mr. Lee, who won an Oscar in 2019 in the best adapted screenplay category for “BlacKkKlansman,” has worked on ads for Capital One, Uber and, most famously, Nike. In the 1980s and 1990s, he directed and starred in commercials for Air Jordans, playing his cinematic alter ego Mars Blackmon opposite Michael Jordan.

“That was lightning in a bottle,” Mr. Lee said from a flight bound for the Cannes Film Festival, where he is the first Black person to lead the festival jury.

He declined to say how much he had been paid for the Coin Cloud commercial, but noted that “if anyone’s known my body of work over the last four decades, you kind of know about the way I see the world, and when they approached me, it fit in line.”

As the coronavirus pandemic continues to highlight financial disadvantages for people of color, Mr. Lee hopes to promote cryptocurrency as neutral to race, gender, age and other identifying characteristics.

But he was no expert before filming began, and had to take “a crash course” on crypto. He insisted that the commercial include a line urging viewers to do their own research on virtual money.

Mr. Lee said he now planned to invest in virtual coins. He said he would not, however, go anywhere near the digital ownership certificates known as nonfungible tokens.

“NFTs, I don’t understand that,” he said, laughing. “I’m old school, so sometimes my children have to turn on the TV — all those remotes and stuff.”