What is crypto staking? + MORE Feb 8th

In the dog-eat-dog world of cryptocurrencies, two digital coins are adding a note of levity: dogecoin and shiba inu. As evident in their amusing names, they refuse to take themselves too seriously. These cryptos are “memecoins,” a category of lightweight crypto assets inspired by internet memes, jokes and trends.

According to a CoinMarketCap estimate, there are 295 memecoins circulating in the ever-expanding cryptoverse. Leading the pack are dogecoin (DOGE)—inspired by an old meme featuring a Shiba Inu dog—and shiba inu coin (SHIB), a meme-within-a-meme spin-off of dogecoin.

Despite their goofy origins, these satirical coins have gathered a sizeable following of enthusiasts charmed by the low-stakes, high-gains game of memecoins. As the coins’ popularity has grown, so have their prices, going from a tiny fraction of a penny to a slightly bigger fraction of a penny.

On the face of it, this rise in value seems unremarkable, but the devil lurks in the details. A virtual coin going from US$0…

If 2020 was a transformative year for cryptocurrencies, 2021 saw the digital currency landscape evolve and expand with disruptive innovations. One of the hottest and most impactful areas of the blockchain economy is decentralized finance, or DeFi.

DeFi is fast emerging as a borderless, friction-free, cheaper and faster alternative to the current financial system. At its core, DeFi is a network of applications that are designed to replicate traditional financial instruments such as lending, borrowing and investing but with cryptocurrency, which doesn’t require intermediaries such as banks or brokerages to make decisions or approve transactions.

DeFi’s practical and financial appeal has drawn attention and dollars from tech enthusiasts, app developers and crypto investors. The DeFi market is booming. The estimated value of funds locked into DeFi-related contracts is US$240 billion, up from about US$21 billion at the end of 2020, as of Dec. 31, 2021, according to Defi Llama.

At its current growth rate, DeFi is set to become a major element of the digital assets economy…

Cryptocurrencies had a banner year in 2021. Wild price swings, institutional adoption, spectacular gains, rapid tech innovation, celebrity backing, social media dominance and the emergence of low-stakes, high-gains memecoins have accorded crypto investing a cult-like status.

However, among all the razzmatazz, there is an aspect of crypto ownership that hasn’t gotten the attention it deserves: crypto staking. This is a way to earn yield from your holdings—but only with certain cryptocurrencies. Knowing which ones might influence your purchasing decisions.

Let’s take a close look at what crypto staking is, how it works and why investors should pay attention to it.

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What is staking?

Crypto staking is the process of pledging or locking up crypto holdings in exchange for rewards or interest payments, typically in the form of additional coins. By lending coins to their respective blockchains and serving as a validator (more on that later), investors can put their assets to work rather than having them sit idle in their crypto wallets, the digital equivalent of stuffing cash under the mattress…

The cryptosphere abounds in stories of windfall-like gains and spectacular losses. One differentiating factor separating the winners from the losers is the use of powerful crypto tools and strategies.

As with investing in traditional assets like stocks and bonds, investing in crypto and managing your portfolio goes far beyond picking the right assets.

Similar to a stock trading platform, a cryptocurrency trading platform such as CoinSmart comes with a range of features, including crypto tools that customize your trading experience and provide strategic levers to maximize profits, cut losses, mitigate risk and make informed investing choices.

These features, available under the “Advanced Trade” tab on the CoinSmart platform, can also be the difference between discovering the next blockbuster coin and joining the FOMO-fuelled buying frenzy around overpriced cryptocurrencies.

This guide provides a list of handy crypto tools that could have an effect on your investing experience and help you take pre-emptive measures against erratic price movements in the cryptosphere…

I bought a spousal RRSP in December 2019 and I plan to withdraw from it this week. Is it considered to be my income or my spousal income? I called CRA four times but no one could answer this question for me.—Tom

Spousal RRSP withdrawal rules: Timing matters 

Tom, the rules around the timing of spousal registered retirement savings plans (RRSPs) can be confusing. If you don’t time the withdrawal correctly it may be taxed in your name rather than your spouse’s name, which is not what you want.

Let me see if I can clear this up for you and then I’ll give you some ideas on why a spousal RRSP is a good income splitting tool.

To answer your question, when you make a spousal RRSP contribution you have to wait two full calendar years, with no contributions, before you can make a withdrawal that is taxed in your spouse’s hands.

In your case, Tom, you made a contribution in Dec. 2019. You didn’t make a contribution in 2020 or 2021 which means if your spouse draws from the spousal account in 2022, he/she will be taxed on the withdrawal, not you as the contributor…