Are cryptocurrency ransom payments tax deductible?
Any ransom payments made in cryptocurrency are taxed as property rather than currency, so be aware of the U.S. tax implications.
As trade increasingly has shifted to the digital realm during the global COVID-19 pandemic, cyberattackers are taking advantage of organizations’ lax cybersecurity measures. They are using ransomware to lock these organizations’ data with encryption until a ransom payment in cryptocurrency is made. Back in 2019, 98% of ransomware payments were made in Bitcoin (BTC).
The administration of President Joe Biden is moving to treat cyberattacks — which are estimated to cost $1 trillion a year and often take the form of ransomware — as a national security threat. Intelligence agencies have concluded that they pose an elevated threat to the country, with gasoline, food supplies and hospital systems at risk.