As the popularity of cryptocurrency grows, many Americans have started to invest in crypto such as Bitcoin. If you’re a veteran who has invested in cryptocurrency, you may wonder if doing so will impact your benefits with the United States Department of Veterans’ Affairs (VA).
In this blog, we outline what veterans need to know about cryptocurrency as it relates to VA disability compensation and income.
What Are Cryptocurrencies?
Cryptocurrency is digital or virtual money in the forms of tokens or coins. Some retailers have started to accept cryptocurrency as a form of payment and credit card issuers are also starting to get on board. However, it remains a mostly intangible asset.
The term crypto refers to a complex process called cryptography that enables investors to create and process digital currency transactions using decentralized systems. One of the hallmark features of cryptocurrency is its decentralization, meaning it does not interact with the United States Treasury or any of the country’s banking systems.
Teams of developers create cryptocurrency using a process known as mining. They also use other types of controls prior to making the tokens or coins available for issue.
While lack of government control or oversight has been an important factor in attracting people to cryptocurrency, the government could step in and demand regulation as the popularity of cryptocurrency grows.
You may also hear cryptocurrency referred to as altcoins, and more than 4,000 types of cryptocurrencies exist as of January 2021. Below are just some examples of some of the more well-known types.
- Bitcoin, one of the earliest and most popular forms of alternative currency
- Cardano
- Ethereum
- Litecoin
- Polkado
- Dogecoin (has received recent fame in 2021 due to celebrities)
Does Cryptocurrency Affect VA Benefits?
Since the VA calculates disability compensation based on your income, you might feel concerned that trading in cryptocurrency will cause your benefits to decrease. While the VA has not published any definitive answers regarding this topic, your investment in cryptocurrency should have no impact on your benefits since it is a form of passive income.
The key to answering the question of “Does crypto affect VA benefits?” is understanding the difference between passive and active income.
People earn passive income through means other than working for the money. Some common examples include investing in stocks, bonds, and cryptocurrency. Owning a rental property that someone else maintains and earning royalties from publishing a book are additional examples.
Active income is the money you receive in exchange for your time and efforts through traditional employment, self-employment, or contracting.
Since cryptocurrency is a type of passive income, it should not affect your VA benefits.
Contact Hill & Ponton for Additional Assistance
Even though the VA has not released much information about cryptocurrency and its impact on benefits, the amount you receive each month should not change. That is because the VA only considers income that you work to earn.
The law office of Hill & Ponton focuses almost exclusively on veteran claims. Many of our attorneys are veterans themselves. Please do not hesitate to contact us if you need help with appealing a disability claim with the VA.
