Digital Asset Holding Company FAQs

Below you will find a listing of frequently asked questions about a Digital Asset Holding Company (LLC). If you don’t see your question listed. please contact us.

Frequently Asked Questions

Digital Asset Holding Company FAQs

  • Is it my understanding that transferring the crypto into the LLC triggers a taxable event? Is that correct?

    Tax laws can vary based on your jurisdiction. It’s important to consult with a qualified tax advisor such as your CPA to get accurate information tailored to your specific situation.

    That said, in many jurisdictions, transferring crypto assets into an LLC (Limited Liability Company) could be considered a taxable event. When you move assets between entities, it might be treated as a sale or exchange, potentially triggering capital gains or losses. The tax implications can depend on various factors, including the tax laws in your jurisdiction, the purpose of the transfer, and the structure of your LLC.

    It's crucial to seek professional advice to ensure compliance with local tax regulations and to understand the specific consequences of such transactions in your particular case. Tax laws are subject to change, and consulting with a tax professional will help you make informed decisions based on the latest regulations and your unique financial situation.

  • I am contemplating forming an LLC for my crypto. Do I need a specific dollar amount to begin this process?

    No, there is no dollar value pre-requisite

  • Why it is better to transfer my digital assets to my LLC than personally holding the assets without an LLC?

    Here are several benefits to transferring your digital assets to an LLC:

    Limited Liability Protection

    Personal Asset Protection: An LLC provides limited liability protection, separating your personal assets from those of the business. In the event of legal issues or debts related to the digital assets, your personal assets may be shielded.

    Tax Benefits

    Tax Flexibility: LLCs offer flexibility in terms of tax treatment. You can choose to be taxed as a sole proprietorship, partnership, S corporation, or C corporation, allowing you to optimize your tax strategy based on your financial situation.

    Business Expenses & Deductions

    Deductible Expenses: Business expenses related to managing and securing digital assets may be deductible for the LLC, potentially reducing your overall taxable income.

    Estate Planning

    Succession Planning: Transferring digital assets to an LLC can make succession planning more straightforward, allowing for smoother transfer of ownership or inheritance in case of incapacity or death.

    Risk Mitigation

    Risk Management: Operating through an LLC can help mitigate risks associated with legal actions or disputes, reducing the potential impact on your personal assets.

    Separation of Personal and Business Finances

    Financial Separation: Using an LLC helps keep your personal and business finances separate, making it easier to track business-related expenses and income.

  • How do I get a Letter of Good Standing?

    The Secretary of State's office is usually responsible for business entity registrations. Contact the Secretary of State's office in the state where your LLC is registered to request the Letter of Good Standing. You can usually find contact information on the state's official website.

  • What is the Articles of Incorporation, haven’t seen anything called that?

    The "Articles of Incorporation" is a legal document that marks the creation of a corporation. It is also known by various names, such as "Certificate of Incorporation" or "Corporate Charter," depending on the jurisdiction. This document outlines the fundamental information about the corporation and serves as a foundational document for its existence and operation. 

    The Articles of Incorporation typically include key information such as corporate name, purpose of the corporation, registered agent and office, authorized stock, board of director and incorporators.

    The purpose of the Articles of Incorporation is to formally establish the legal existence of the corporation as a separate entity from its owners (shareholders). Once the document is filed with the appropriate government authority, the corporation gains certain legal rights and responsibilities. It also sets the groundwork for the corporation's internal governance structure, such as the board of directors and the issuance of shares. This document is filed with the relevant government agency, such as the Secretary of State, to officially register and recognize the existence of the corporation.

  • Once I complete my Operating Agreement and get it notarized, who will need it outside of myself and my brokerage?

    For now, keep your Operating Agreement in a handy safe place in case it may be needed in the future. For example, some (but not all) banks may request a copy of the Operating Agreement when opening a business account and you will need to present it to them. This being said, do not show them the “capital contributions” page (where your digital assets are listed). Nor should you even mention “digital assets.”  

To work with Digital Ascension Group to form an LLC for the purposes of holding digital assets, you may use this form:

https://www.digitalfamilyoffice.io/services/llc-entity-formation/