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You may think of your income as being your paycheck or your freelance earnings, but there are actually many different types of income. If you have stocks that are generating dividends, that’s income, as is interest you earn on any savings accounts. Do you own a rental property that has rent payments flowing your way? That’s income, too.

Here, you’ll learn about seven common types of income and how they may affect your financial life.

What Is Income?

Simply put, income is money that a person or business earns in return for labor, providing a product or service, or returns on investments. Individuals also often receive income from a pension, a government benefit, or a gift. Most income is taxable, but some is exempt from federal or state taxes.

Another way to think about income types is whether it is active (or earned) or passive (or unearned).

•  Active or earned income is just what it sounds like: money that you work for, whether you are providing goods or a service.

•  Passive or unearned income is money you receive even though you are not actively doing anything to get it. For instance, if you have a high-yield savings account that earns you interest, that is passive income. Government benefits, capital gains, rental income, royalties, and more are also considered passive income. (We’ll go through these variations in more detail in a minute.)

People who are paid a salary may tend to think that their annual paycheck earnings are their income, but in truth, it’s common for people to have multiple income streams. Granted, your salary may be by far the largest stream of income, but when considering your overall financial picture, don’t forget to think about the other ways that money comes to you.

Different Types of Income

Here’s a look at seven common types of income.

1. Earned Income

Earned income is the money you earn for work you do, either in a job or self-employed. Earned income includes wages, salaries, tips, and bonuses.

Earnings are taxed at varying rates by the federal and state governments. Taxes may be withheld by your employer. Self-employed workers often pay quarterly and annual taxes directly to the government. Lower-income workers may be eligible for the earned income tax credit.

2. Business Income

Business income is a term often used in tax reporting; you may sometimes also hear it referred to as profit income. It basically means income received for any products or services your business provides. It is usually considered ordinary income for tax purposes.

Expenses and losses associated with the business can be used to offset business income. Business income can be taxed under different rules, depending on what type of business structure is used, such as sole proprietorship, partnership, corporation, etc.

3. Interest Income

When you put money into various types of interest-bearing financial vehicles, the return is considered interest income. Retirees often rely on interest income to help fund their retirement. You can earn interest from a variety of sources including:

•  Certificates of deposit (CDs)

•  Government bonds

•  Treasury bonds and notes

•  Treasury bills (T-bills)

•  Corporate bonds

•  Interest-bearing checking accounts

•  Savings accounts

Interest income is typically taxed as ordinary income, though some types of interest are tax-exempt.

4. Dividend Income

Some companies pay stockholders dividends as a way of sharing profits. These are usually regular cash payments that investors can take as income or reinvest in the stock. Dividends from stocks held in a taxable brokerage account are considered taxable income. These funds may be taxed at your regular income-tax rate or at a lower long-term capital gains rate, depending on whether they are classified as “ordinary” or “qualified”.

5. Rental Income

Just as it sounds, rental income is income earned from rental payments on property you own. This could be as straightforward as renting a room in your house or as complicated as owning a multi-unit building with several tenants.

Rental income can provide a steady stream of passive vs. active income. It may enhance your livelihood or even be your main income. When your rental property increases in value, you may also gain from that appreciation and increase in equity. In addition, rental income qualifies for several tax advantages, including taking depreciation and some expense write-offs.

But there are downsides. Owning a rental property isn’t for the faint of heart. Unreliable tenants, decreasing property values, the cost of maintaining and repairing properties, as well as fees for rental property managers can all take a bite out of your rental income stream.

6. Capital Gains

Another important income stream can come from capital gains. You incur a capital gain when you sell an asset for more than what you originally paid for it. For the purposes of capital gains, an asset usually means an investment security such as a stock or bond. But it can also encompass possessions such as real estate, vehicles, or boats. You calculate a capital gain by subtracting the price you paid from the sale price.

There are two types of capital gains — short-term and long-term.

•  Short-term capital gains are realized on assets you’ve held for one year or less.

•  Long-term capital gains are earned on assets held for more than a year.

The tax consequences are different for each type of capital gain. Short-term gains are taxed as ordinary income, while long-term capital gains may be taxed at a lower rate.

Keep in mind, however, that capital losses can happen too. That’s when a capital asset is sold for less than its original purchase price. While it’s never pleasant to experience losses, there can be a small silver lining in this case. You may be able to claim a capital loss deduction from your annual capital gains.

7. Royalty Income

Royalty income comes from an agreement allowing someone to use your property. These payments can come from the use of patents, copyrighted work, franchises, and more.

Some examples: Inventors who license their creations to a third party may receive royalties on the revenue their inventions generate. Celebrities often allow their name to be used to promote a product for royalty payments. Oil and gas companies may pay landowners royalties to extract natural resources from their property. Musicians may earn royalties from music streaming services.

Royalty payments are often a percentage of the revenues earned from the other party using the property. Many things impact how much royalty is paid, including exclusivity, the competition, and market demand. How royalty payments are taxed can also vary, depending on the type of agreement.

Recommended: 10 Personal Finance Basics

The Takeaway

Understanding the seven general income streams (such as earned, dividend, and rental income) can help you make the most of your financial planning. Earning income from any of these sources can provide stability and help you achieve long-term goals, such as saving for retirement. Because some types of income have unique tax implications, it can be important to check with your tax advisor about any tax consequences that may exist.

Aside from earned income, interest is a type of income many people receive. And seeking out the best possible interest rate can be a solid way to enhance your earnings; looking for a high-yield bank account may be a good place to start.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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FAQ

What are the seven common types of income?

The seven common types of income are: earned income (money earned for work); business income (money received for products or services sold); interest income (returns from interest-bearing financial accounts); dividend income (payments from companies to stockholders as a share of profits); rental income (income earned from rental payments on property owned); capital gains (profit incurred when selling an asset for more than its purchase price); and royalty income (payments from licensing property like patents or copyrighted work).

What are the three main types of income?

The three main types of income include: active income (earned from performing a service like a job), passive income (generated from ventures like rental properties where you are not actively involved) and portfolio income (derived from investments such as stocks and bonds). These categories are distinguished by how the money is generated and how the income is taxed.

What are the four main income categories?

From a personal finance perspective, the four main income categories are: active income (money earned directly from a job or services rendered), passive income (recurring income from ventures in which you are not actively involved), portfolio income (earnings from investments like stocks, bonds, and mutual funds), and government income assistance (financial aid from the government for those who qualify).

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When Bitcoin launched in 2009, it was the only digital currency of its kind. By 2011, though, new types of cryptocurrency began to emerge as competitors adopted the blockchain technology Bitcoin was built on to launch their own platforms and currencies. Suddenly, the race to create more crypto was on.

Read on to learn more about the seven main types of cryptocurrency, from proof-of-work to proof-of-stake cryptocurrencies, to utility tokens, stablecoins, and more.

Understanding the Cryptocurrency Landscape: More Than Just Bitcoin

Bitcoin (BTC) may be the most recognized cryptocurrency, but it is one of thousands. It’s difficult to pin down an exact number for how many cryptocurrencies exist, since new coins continue to be developed while others become obsolete.

By some counts, close to 37 million unique cryptocurrencies have been created over time, with more on the way.1 While cryptocurrencies have been largely unregulated for much of their history, that’s been changing in recent years. A regulatory framework has begun to take shape as the Securities and Exchange Commission (SEC), U.S. Congress, and other agencies in the U.S. and abroad have passed crypto-related regulations and laws.

What Is Cryptocurrency and Why Do Different Types Exist?

Cryptocurrency is a type of digital asset that’s created, validated, and exchanged through the blockchain, without the need for any type of central clearing intermediary. What this means is that cryptocurrencies operate on decentralized networks that may be transmitted without having to go through a third party.

Transactions are publicly viewable on the blockchain, but the identities of those exchanging cryptocurrencies are not transparent (though not always untraceable), adding to its appeal for some.

Why are there so many different types of cryptocurrency? Innovation, a push towards decentralized finance, and increased market interest all play a part.

Developers have created different types of cryptocurrencies largely to support and expand the capabilities of blockchain networks. Cryptocurrencies such as Bitcoin and Litecoin were developed to support peer-to-peer payments, for example, while others, such as Ethereum and Solana, were designed to support blockchain-based decentralized apps (dApps).

Utility tokens were developed to provide access to services or functionalities on a blockchain network — governance tokens, for instance, allow users to vote on decisions being made by a certain network.

Blockchain technology is also being actively explored in areas outside of finance, such as health care, supply chain management, real estate, and art.

The Fundamental Difference: Coins vs Tokens

Although some people use the terms crypto, coins, and tokens interchangeably, they’re not the same. To gain a basic understanding of cryptocurrency, it’s important to understand how these terms differ from one another.

Cryptocurrency may broadly refer to coins or tokens, but the two have different meanings:

•   Coins: Crypto coins are native to their own blockchain network, and provide a means of exchange. They’re strings of computer code that can represent an asset, concept, or project — whether tangible, virtual, or digital — intended for various uses and with varying valuations. Examples include Bitcoin and Ethereum.

•   Tokens: Tokens are programmable assets that are created on an existing blockchain network, and allow users to access certain services or features. They’re usually created and distributed through an initial coin offering (ICO), much like an initial public offering (IPO) for stock.

While crypto coins operate on their own independent blockchain and offer a broader medium of exchange for that network, tokens are built on top of an existing blockchain and have any number of uses, such as representing an asset — a stake in a precious metal, for example — or facilitating a transaction on the blockchain. Both could potentially be bought or sold through a crypto exchange.

Crypto coins are created, tracked, and verified by their native blockchain network and essentially power the blockchain by serving as payment for the transactions that create and secure new blocks. While crypto coins are fundamentally different from fiat currencies, like the dollar, euro, or yen — fiat money is tangible, and it’s governed by central authorities — they also have some similarities, since both are designed to be a medium of exchange and a unit of value.

Tokens, meanwhile, can be used as part of a software application, such as granting access to an app, verifying identity, or tracking products moving through a supply chain. They can represent units of value, too, including for real-world items, like real estate, points, or commodities. They can also represent digital art — as with non-fungible tokens (NFTs). There have even been experiments using NFTs to represent physical assets, such as real-life art and real estate.

Numerous crypto coins and tokens have been introduced at a rapid pace since Bitcoin was launched in 2009, and while this can drive innovation, it’s important to remember that cryptocurrencies come with high risk, as well, such as from scammers counterfeiting tokens or from the high level of volatility these assets experience.

Type 1: Proof-of-Work (PoW) Cryptocurrencies – The Originals

Proof-of-work is the original framework Bitcoin was built upon, and it represents the mechanism by which new blocks are added to the blockchain. In a proof-of-work system, “miners” compete to solve complex mathematical puzzles and earn cryptocurrency.3

What Is Proof-of-Work?

Proof-of-work is a consensus mechanism, which is a standard that governs how cryptocurrency transactions are validated and information is added to a blockchain network. It allows crypto miners to compete for an opportunity to add a block to the blockchain, and receive a reward for their efforts.

With proof-of-work, crypto miners use powerful computer systems to race to solve an encryption puzzle. The winner creates a new block that contains transaction information, which is verified by the entire blockchain network as it’s added to the chain.

The rewards earned by winning miners are typically a certain number of newly minted coins, though that number varies between cryptocurrencies.

Examples of PoW Coins

Proof-of-work coins are represented by some of the most well-known types of cryptocurrency. Some of the most popular PoW coins by market cap include:

•   Bitcoin (BTC)

•   Dogecoin (DOGE)

•   Bitcoin Cash (BCH)

•   Litecoin (LTC)

•   Ethereum Classic (ETC)

Bitcoin is the largest PoW coin by market cap, with $2.34 trillion worth of coins in circulation. As of August 2025, there were just over 19 million Bitcoins being held or exchanged, out of a total distribution cap of 21 million. The last Bitcoin is expected to be mined sometime in 2140.5,6

Type 2: Proof-of-Stake (PoS) Cryptocurrencies – The Evolution

Proof-of-stake cryptocurrencies were developed as an alternative to proof-of-work coins, which are viewed as having scalability limitations given the vast amounts of power required to mine them. A proof-of-stake system relies on crypto staking, rather than mining, but it serves a similar function.

What Is Proof-of-Stake?

Proof-of-stake is a consensus mechanism that’s used to reward participants who validate transactions that are added to the blockchain.

Here’s how it works:

•   Stakers agree to lock away some of their cryptocurrency on a blockchain network through a process called staking.

•   The blockchain network can use the holdings to create a new block and validate transactions.

•   The staker with the largest “stake” has a higher probability of being chosen to validate transactions.

•   Validated transactions earn the staker a reward; stakers who violate protocols, however, could face a penalty.

Proof-of-stake is considered by some to be an upgrade from proof-of-work. It requires much less computing power, reducing strain on the energy grid, and it also allows stakers an opportunity to potentially earn passive income while holding cryptocurrency. That said, stakers face the risk that their coins could lose value while they’re locked up for staking.

Examples of PoS Coins

Compared to Bitcoin, proof-of-stake coins claim a smaller share of the market. However, the numbers are growing, and these coins represent some of the biggest movers in terms of market cap:

•   Ethereum (ETH)

•   Solana (SOL)

•   Cardano (ADA)

•   Toncoin (TON)

•   Algorand (ALGO)

Ethereum has the largest market cap overall of these, at $430.88 billion, as of August 2025. This coin has seen a 911% increase in the last five years.

Type 3: Utility Tokens – The Keys to a Network

Utility tokens, or user tokens, are a type of cryptocurrency that serves a specific purpose inside a decentralized network. They’re built on an existing blockchain and grant their holders access to distinct functions, features, or services.

What Are Utility Tokens?

A utility token is a digital asset that grants holders access to a certain product or service for a given cryptocurrency. They’re typically developed using smart contracts and may be programmed for a range of uses, such as to access storage space or to bring external data onto a blockchain network. Or, as with a governance token, they may give holders the option to vote on changes to a blockchain network.

More broadly, utility tokens can help encourage participation in and support of the crypto ecosystem they were designed for. They may serve as a loyalty bonus, for example, provide access to exclusive features, or other incentives for interacting with the network, all of which may help foster the growth of that crypto community.

Unlike other types of tokens that may confer a stake in an asset or a physical entity, utility tokens serve primarily as a key to various features offered by a cryptocurrency.

Examples of Utility Tokens

Utility tokens are designed with specific use-cases in mind. Their value is typically measured more in terms of what they allow you to do, versus what value they represent.

Here are some examples of utility tokens:

•   Ether (ETH): Ether is the native token of Ethereum, which is the second-largest blockchain network. Ether is used to pay the Ethereum “gas fee” required to process transactions on the blockchain. Given its reach, however, it’s sometimes seen as a currency (having a store of value) in its own right.

•   Chainlink (LINK): Chainlink is a decentralized oracle network that acts as a bridge between smart contracts and real-world data. Tokens are used to pay for data services and incentivize the production of accurate data feeds.

•   Basic Attention Token (BAT): BAT is an Ethereum-based token that’s used within the Brave browser ecosystem. Browser users earn tokens by opting into ads; they can use their tokens to unlock premium content.

•   Golem (GLM): Golem is a decentralized supercomputer that lets users rent their computing power to others. Tokens are used to pay for services through the platform.
9,10

•   The Sandbox (SAND): SAND is the utility token for the community-driven blockchain gaming platform, The Sandbox. Players can earn SAND and use it to purchase virtual assets, access exclusive interactions, and take part in governance, among other things.

Type 4: Stablecoins – The Price Stability Anchor

Stablecoins are digital assets whose value is tied or “pegged” to another asset. Of the $250 billion in stablecoins currently in circulation, 99% of them are pegged to the U.S. dollar. Stablecoins are an alternative to Bitcoin and other cryptocurrencies whose value may fluctuate widely due to changes in supply and demand, or market sentiment.11

What Are Stablecoins?

Stablecoins are cryptocurrencies that are stored on the blockchain, but whose value is tied to an underlying currency or commodity. For example, stablecoins may be pegged to the U.S. dollar, the Euro, or gold. Because they’re tied to underlying assets, stablecoins can be redeemed for those assets.^[1]

Stablecoins are designed with the goal of maintaining a stable price relative to the asset they’re pegged to, and in comparison to the high price volatility of cryptocurrencies in general. That said, stablecoin stability may depend on a number of factors, such as the stablecoin’s level of liquidity, market volatility, and transparency around reserves.

The regulatory landscape for stablecoins is quickly evolving, such as with the recent passing of the 2025 Genius Act, which provides oversight for issuers of payment stablecoins and rules focused on consumer protection.^[2] The European Union’s Markets in Crypto-Assets (MiCA) regulation also went into effect in 2025. Under MiCA, stablecoins issuers are regulated like financial institutions and must meet certain EU reserve requirements. Some stablecoins are choosing not to seek EU compliance, however, such as Tether (USDT), which keeps much of its reserves in U.S. Treasurys.^[3]

As the industry shifts, there are still risks to be aware of, such as a stablecoin losing its peg value, technology or operational risks, or the potential for scams or fraud.

Common uses for stablecoins include:

•   Paying for goods and services

•   Making cross-border payments

•   Offering potential protection against price instability in cryptocurrency markets

Crypto users may use stablecoins to buy other cryptocurrencies in lieu of cash, and more payment processors are allowing the use of these coins to pay for transactions online.

Examples of Stablecoins

Stablecoins represent a growing share of the total cryptocurrency market. Some of the most well-known stablecoins by market cap include:

•   Tether (USDT)

•   USDC (USDC)

•   USDS (USDS)

•   Dai (DAI)

•   PayPal USD (PYUSD)

The total market cap of stablecoins was $268.27 billion as of August 2025. With a few exceptions, stablecoins have a relatively low price point compared to other types of cryptocurrency.

Type 5: DeFi Service Providers – The Future of Finance

DeFi service providers represent a subset of the cryptocurrency landscape. They operate on decentralized, blockchain-based frameworks in order to offer services that allow individuals to conduct transactions directly. For example, a DeFi coin is similar to a physical coin in that it transfers value, but it does so without going through a central intermediary.

What Is Decentralized Finance (DeFi)?

Decentralized finance, or DeFi, describes financial services that are executed through the blockchain. By allowing for direct, peer-to-peer transactions, DeFi advocates note that it could help reduce barriers to entry for those who traditionally have a harder time accessing financial services, and allow for potentially faster, cheaper transactions.

Some of the top providers building out the decentralized finance landscape are developing decentralized peer-to-peer exchanges, borrowing and lending protocols, data services through decentralized oral networks (DONs), and stablecoins, which may help provide a bridge between blockchain systems and traditional assets.

Most, though not all, DeFi protocols and applications are built on Ethereum. DeFi tokens can be used to access services and goods through decentralized apps. Though DeFi tokens represent a smaller share of the cryptocurrency market, their popularity is growing.

DeFi, of course, is in its early stages, and while the blockchain technology itself helps to safeguard information, the other apps, systems, and entities that interact with the network could pose risks. It’s important to be cautious when considering options, especially as crypto regulations continue to develop.

Examples of DeFi Tokens

Here are some of the largest DeFi tokens by market cap:

•   Stellar (XLM)

•   Hyperliquid (HYPE)

•   Uniswap (UNI)

•   Polkadot (DOT)

•   Aave (AAVE)

The total DeFi token market was valued at $111.94 billion as of August 2025. It’s essential to distinguish between DeFi tokens and DeFi coins. The difference, again, between tokens and coins is how they relate to the blockchain.

Type 6: Privacy Coins – The Anonymous Transactions

Privacy coins offer anonymity by obscuring certain details about their users. These coins can be sent and received anonymously, without disclosing the location of the parties involved in the transaction.

What Are Privacy Coins?

Privacy coins enable the secure transfer of cryptocurrency without revealing either its origin or destination. This is a key departure from the more public nature of transactions conducted on the blockchain. Public blockchains were designed with the idea that information be transparent and immutable, allowing participants to view and validate the data. With Bitcoin, for example, Bitcoin users can access transaction data (though not identity information) through public Bitcoin addresses used to make payments.

A privacy coin blocks certain information from view through the use of different strategies, including:

•   Protocols that generate stealth addresses

•   Mixing of transactions to make the routing of coins more difficult to trace

•   Tools that allow for the validation of transactions without requiring the disclosure of any identifying information

Privacy coins aren’t accessible in every country or crypto market. Some countries have banned them outright, while others have taken steps to remove some of the secrecy surrounding them.15
For example, recent anti-money laundering regulations passed by the European Union will, starting in 2027, ban financial and credit institutions as well as crypto-asset service providers from managing cryptocurrencies that offer anonymous accounts.

Examples of Privacy Coins

The market for privacy coins is smaller than other types of cryptocurrencies, and your ability to buy them may depend on where you live. Examples of popular privacy coins include:

•   Monero (XMR)

•   Zcash (ZEC)

•   Beldex (BDX)

•   Decred (DCR)

•   Dash (DASH)

As of August 2025, the privacy coin market was valued at $7.16 billion. A glance at pricing charts shows that privacy coins have the potential to be exceptionally volatile.

Type 7: Meme Coins – The High Risk, High Reward Speculation

Meme coins are a type of cryptocurrency whose popularity is driven by memes or trends.

What Are Meme Coins?

Meme coins are coins that gain attention because they align with a trend or newsworthy event. Any coin can become a meme coin if someone or something pushes it into the spotlight. Some of the most popular meme coins can develop cult-like followings, which can help drive demand.

Compared to other types of cryptocurrency, meme coins tend to be more volatile because their value is often tied to their popularity. A coin that’s hot today may not be tomorrow, and its value could quickly fizzle if the trend dies down, or the meme that the coin is associated with loses popularity.

Examples of Meme Coins

Meme coins can sometimes be some of the most recognizable cryptocurrencies if they grab the attention of the broader population. Examples of popular meme coins include:

•   Dogecoin (DOGE)

•   Shiba Inu (SHIB)

•   Pepe (PEPE)

•   Pudgy Penguins (PENGU)

•   Bonk (BONK)

Meme coins often have lower prices than other cryptocurrencies. As of August 2025, meme coins had a market cap of $76.2 billion.

The Critical Impact of Tax Treatment

The IRS treats cryptocurrency and other digital assets as property, meaning that any gains you generate from them are taxable. If you have digital asset transactions during the year, you’re required to report them on your tax return.

The sale of digital assets, including cryptocurrency, can trigger capital gains if you sell at a profit, or capital losses if you sell for less than the original purchase price. Selling off crypto assets after seeing huge gains in value could significantly increase your tax liability for the year.

You can offset gains with losses through a process known as tax loss harvesting. That can reduce what you owe in federal taxes for the current year.

Income earned through cryptocurrency activities, such as from mining rewards, is considered ordinary income. Depending on your circumstances, the tax rules applying to your digital assets could get complicated. You may want to talk to a certified public accountant (CPA) or another tax professional about how crypto assets could affect your overall tax picture.^[4]

The Takeaway

Cryptocurrencies are all digital assets built upon a distributed network and, likewise, upon the principle of decentralization. It’s important to remember, however, that there are several types of cryptocurrencies, and each one — be it proof-of-work, proof-of-stake, stablecoins, DeFi, or utility tokens — has myriad options within it.

Different cryptocurrencies have different goals, functionalities, markets, and prospects. By the same measure, cryptocurrencies are also not created equally in terms of risk, both in their own right, and in terms of how they may align with your financial goals. Understanding the different types of cryptocurrencies can help you better understand the role they may play in crypto markets and potentially in your portfolio.

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FAQ

How many types of cryptocurrencies are there?

Broadly speaking, cryptocurrencies can be grouped into coins and tokens. Beyond those two main types, there are millions of different types of crypto being exchanged, with new currencies entering the market regularly.

What is the most common type of cryptocurrency?

Bitcoin is likely the most common type of cryptocurrency, or at least the one people are most familiar with. It’s also the crypto asset that holds the lion’s share of market capitalization. As the first blockchain coin, Bitcoin opened the door for the introduction of other cryptocurrencies, including Ethereum and Litecoin.

What is the difference between a coin and a token?

The main difference between a coin and a token is their relationship to the blockchain. Coins are the native digital currency of their blockchain, while tokens sit on top of an existing blockchain. Tokens are often associated with digital currencies, but they can also represent other digital assets, like NFTs, or something intangible, like voting rights.

Are NFTs a type of cryptocurrency?

NFTs or non-fungible tokens are not a type of cryptocurrency, but they share space with crypto on the blockchain. An NFT represents ownership of a unique digital or physical asset, such as a drawing, image, or piece of artwork.

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About the author

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Article Sources

1. U.S. Securities and Exchange Commission. Statement on Stablecoins.
2. Congress.gov. S.1582 – GENIUS Act.
3. World Economic Forum. The GENIUS Act is designed to regulate stablecoins in the US, but how will it work?.
4. Intuit Turbotax. Your Crypto Tax Guide.

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Cryptocurrency and other digital assets are highly speculative, involve significant risk, and may result in the complete loss of value. Cryptocurrency and other digital assets are not deposits, are not insured by the FDIC or SIPC, are not bank guaranteed, and may lose value.

All cryptocurrency transactions, once submitted to the blockchain, are final and irreversible. SoFi is not responsible for any failure or delay in processing a transaction resulting from factors beyond its reasonable control, including blockchain network congestion, protocol or network operations, or incorrect address information. Availability of specific digital assets, features, and services is subject to change and may be limited by applicable law and regulation.

SoFi Crypto products and services are offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency. SoFi Bank does not provide investment, tax, or legal advice. Please refer to the SoFi Crypto account agreement for additional terms and conditions.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
This article is not intended to be legal advice. Please consult an attorney for advice.

SOCRYP-Q325-047

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Scammers are constantly looking for new ways to make money, and the rapid rise of cryptocurrency in recent years has opened the door to new opportunities for fraud. Crypto scams often involve tricking people into buying or sending digital currency through deceptive tactics like fake investment platforms, phishing, and false promises of high returns. In 2024, crypto scams led to $9.3 billion in losses — a 66% increase from the previous year.^[1]

Falling victim to a crypto scam can be devastating, leaving you feeling helpless, angry, and betrayed. While recovering funds is challenging due to the decentralized and irreversible nature of crypto transactions, you’re not necessarily out of options. Below, we outline key steps to consider in order to report the crime, help limit further losses, and support investigations that could potentially lead to restitution.

The Reality of Crypto Scam Recovery

Crypto scam recovery refers to the process of reporting fraudulent activity, protecting your remaining assets, and assisting law enforcement in tracking stolen funds. However, recovery doesn’t usually mean getting your money back immediately — or sometimes, at all.

Cryptocurrency transactions do not come with the same legal protections provided to credit or debit card payments and are typically irreversible. While crypto transactions are permanently recorded on publicly available ledgers called blockchains, U.S. law enforcement can run into difficulty tracing payments to overseas exchanges, especially in countries with lax anti-money laundering laws and regulations.

That said, recovery isn’t impossible. There have been cases where funds have been traced, frozen, and returned to victims of crypto scams. While these outcomes are rare, reporting a crypto scam is generally worth the effort, especially since it can help prevent others from being victimized.

Steps to Take After a Crypto Scam

If you believe you’ve been scammed, it’s important to take quick action. This may help to limit further damage and support a stronger case when making a report. Here are key steps involved in crypto scam recovery:

1. Stop All Transactions Immediately

If you suspect a scam, do not send additional funds. While this might sound obvious, fraudsters often tell victims they must pay “fees” or “taxes” to access their principal or profits. This is part of the scheme, however. Legitimate brokers, crypto exchanges, or other crypto service providers should never demand extra payments to release your funds.

2. Protect Your Accounts

Change passwords on your crypto exchange, email, and any financial accounts connected to your crypto wallet. Enable two-factor authentication (2FA) to help reduce the risk of further compromise. If you provided personal information such as your Social Security number, contact the major credit bureaus (Equifax®, Experian®, and TransUnion®) to place a fraud alert or security freeze on your credit file. This helps prevent scammers from opening new accounts in your name.

3. Collect All Relevant Information and Documents

Write down everything you remember about the scam while it’s still fresh in your mind. Also gather as much documentation you can related to the incident, including:

•   Names and titles used by the scammers

•   Phone numbers, emails, and messaging accounts used to contact you

•   Screenshots of conversations or websites

•   Exchange account details, wallet addresses, and transaction IDs

•   Dates, times, and amounts of cryptocurrency sent

•   Any payment receipts or confirmation statements

4. Report the Scam to Relevant Authorities

File reports with federal and local agencies as soon as possible. Each report helps build larger cases against fraudulent operations and improves tracking (see below for details on which agencies to contact and how). It’s also a good idea to report the scam to the crypto exchange you used to send the money. The company may be able to place more security on your account and freeze or ban the scammer’s account, potentially protecting others.^[2]

5. Explore Options for Financial Recovery

Review your homeowner’s insurance policy to see if there is any coverage for fraud-related losses or identity theft. You might also consult a tax professional to see if your losses qualify for a deduction. If the loss has caused major financial hardship or significant debt, consider contacting a reputable financial planner or a nonprofit credit-counseling agency for help rebuilding your finances.

Where and How to Report a Crypto Scam

Below are the main U.S. agencies and authorities that accept reports of cryptocurrency fraud and related crimes.

Federal Trade Commission (FTC)

The FTC handles reports of consumer fraud, deceptive advertising, and investment scams, including those involving cryptocurrencies. You can report a scam at ReportFraud.ftc.gov. The FTC uses these reports to spot patterns, build cases, and issue consumer alerts.

Securities and Exchange Commission (SEC)

The SEC oversees securities-related investments and can investigate crypto projects that illegally sell unregistered securities or mislead investors. You can file a complaint using the SEC’s online form or call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330 for guidance.^[3]

Commodity Futures Trading Commission (CFTC)

The CFTC regulates the country’s derivatives markets, including futures, options, swaps, and some digital assets. You can report a crypto scam at CFTC.gov or by calling 866-FON-CFTC (866-366-2382).^[4]

FBI Internet Crime Complaint Center (IC3)

The FBI’s Internet Crime Complaint Center (IC3) is a key federal hub for reporting cyber-related crimes, including crypto scams, hacking, and online extortion. You can report a cryptocurrency at ic3.gov. But do not inform the suspected scammers, as this could compromise the investigation.

Local Law Enforcement

Even if the scam took place online or involved international parties, it’s still a good idea to report it to your local police department.

While local police may not be able to trace international wallets, your report will become part of an official database. When a scam receives multiple reports, the police may escalate the case, either by launching a more thorough inquiry or by passing it to a different agency. You may also need to have a copy of a police report if you plan to file an insurance claim for fraud losses.

Beware of Crypto Scam Recovery Services

After losing crypto, victims are often targeted again by fake “recovery experts,” effectively adding insult to injury. These scammers often claim they can retrieve lost funds in exchange for upfront fees or “processing costs.” They may operate legitimate-looking websites complete with glowing testimonials and impressive recovery rates.

Unfortunately, these operations are almost always scams. No private individual or company can guarantee the recovery of lost crypto. Even if a recovery company is legitimate, it does not have the same authority as law enforcement agencies to compel the freezing or seizure of cryptocurrency assets. Generally, the safest path is to work only with official regulators or law enforcement, not private firms promising immediate results.

How to Spot a Crypto Scammer

Recognizing scam patterns can help prevent losses before they occur. Many crypto schemes share common warning signs:

•   Guaranteed returns: Crypto scammers often lure victims by offering sky-high and risk-free profits. But there are no guarantees in the world of buying and selling digital assets.

•   Lack of transparency: Vague statements and secrecy about a crypto opportunity may be a sign of a scam. A legitimate crypto project will provide detailed information about their team, technology, and plan.

•   Upfront crypto payment: A real company will not ask you to make an advance crypto payment to purchase something or protect your funds.

•   High-pressure tactics: Scammers will often create a sense of urgency by claiming an exclusive opportunity or limited availability. A reputable project will let you make educated decisions without feeling rushed.

•   Celebrity endorsements: Scammers often use fake endorsements or AI-generated deepfakes of celebrities to lure people into fraudulent schemes. While not every crypto endorsement is a scam, consumers should be highly skeptical.

•   Romantic involvement: If someone you meet online wants to show you how to invest in crypto or asks you to send them coins, it may be a scam.

What Evidence Do You Need Before Reporting a Scam?

Accurate and detailed evidence strengthens your report and may help increase the chance that authorities can investigate. Before filing a complaint, you typically need to gather the following evidence:

•   Copies of communications with the scammer (e.g., emails, text, DMs)

•   All identifying information you have, such as names, e-mail addresses, and phone numbers

•   Domain names, website addresses, or apps the scammer instructed you to use

•   Any two-factor authentication or “one time passcode” information

•   Which cryptocurrency exchanges you used to send or receive funds

•   Transaction details (including wallet addresses, amount and type of crypto, date and time, and transaction ID)

•   The timeline of the scam

The Takeaway

Becoming a victim of a crypto scam can be painful, but it doesn’t mean you’re powerless. The key is to respond quickly. Important steps to recovery may include securing your accounts, documenting every detail, and reporting the incident to trusted authorities. Acting fast not only may help protect you, but may also help others avoid similar traps.

As crypto continues to evolve in 2025, scammers are getting smarter, but so are the tools and agencies working to stop them. By staying cautious, informed, and proactive, you can help protect your assets and contribute to a safer digital financial future for everyone.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

Learn more about crypto trading with SoFi.

FAQ

Where is the best place to report a crypto scam?

The best place to report a crypto scam depends on the type of fraud. You may want to start with the Federal Trade Commission (FTC) at reportfraud.ftc.gov. If the scam involved buying, selling, or moving crypto, also report it to the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the FBI’s Internet Crime Complaint Center (IC3). It may also be a good idea to contact your crypto exchange to alert them of suspicious activity.

Can the police help with a crypto scam?

Yes, the police can help, especially if you’ve lost money or personal data. While local law enforcement may not be able to recover your funds, they can document your case, provide an official report, and forward it to state or federal cybercrime units.

How do I report a scam to the FBI’s Internet Crime Complaint Center (IC3)?

To report a crypto scam to the FBI’s Internet Crime Complaint Center (IC3), visit ic3.gov. Fill out the online complaint form with detailed information about the scam, including transaction records, wallet addresses, emails, and communication logs. Be as specific as possible — the FBI uses this data to identify patterns and link related cases. After submission, you’ll receive a complaint ID for tracking. While IC3 may not contact you directly, your report helps ongoing investigations and public protection efforts.

Are crypto recovery services real or just another scam?

Most so-called “crypto recovery services” are unfortunately scams themselves. Fraudsters often pose as recovery specialists or investigators who promise to retrieve stolen funds — for a hefty upfront fee or by stealing more information. It’s generally safer to report your loss to the government agencies, local law enforcement, and your crypto platform, rather than using third-party recovery firms.

What evidence do I need to gather before reporting a scam?

Before reporting a crypto scam, gather all possible evidence to support your claim. This includes transaction IDs, wallet addresses, screenshots of messages or emails, payment confirmations, and links to the scam website or social media profiles. Save any identifiable information about the scammer, such as usernames or email addresses. Organizing these details will help authorities conduct a more effective investigation.

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About the author

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Article Sources

1. FBI. FBI Internet Crime Report 2024.
2. Blockchain Council. Top 5 Ways To Recover Funds From Crypto Scam in 2025.
3. U.S. Securities and Exchange Commission. Cyber, Crypto Assets and Emerging Technology.
4. Commodity Futures Trading Commission. Digital Assets.

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Photo credit: iStock/Andrii Yalanskyi

Cryptocurrency and other digital assets are highly speculative, involve significant risk, and may result in the complete loss of value. Cryptocurrency and other digital assets are not deposits, are not insured by the FDIC or SIPC, are not bank guaranteed, and may lose value.

All cryptocurrency transactions, once submitted to the blockchain, are final and irreversible. SoFi is not responsible for any failure or delay in processing a transaction resulting from factors beyond its reasonable control, including blockchain network congestion, protocol or network operations, or incorrect address information. Availability of specific digital assets, features, and services is subject to change and may be limited by applicable law and regulation.

SoFi Crypto products and services are offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency. SoFi Bank does not provide investment, tax, or legal advice. Please refer to the SoFi Crypto account agreement for additional terms and conditions.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOCRYP-Q325-111

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The federal GENIUS Act, passed in July 2025, is the first major piece of legislation aimed at bringing clear rules to the fast-evolving world of cryptocurrency.^[1] The Act primarily focuses on how stablecoins — digital tokens designed to keep a steady value, usually tied to the U.S. dollar — can be issued and managed.

For people who buy and sell digital assets, this new legislation represents a major turning point: It attempts to balance innovation in crypto with much-needed regulation and consumer protections. Here’s a closer look at what the GENIUS Act means for stablecoins and how its effects may ripple through the larger crypto ecosystem.

What Is the GENIUS Act?

The GENIUS Act — formally titled the Guiding and Establishing National Innovation for U.S. Stablecoins Act — represents the first major U.S. statute to codify rules specifically for stablecoins.^[2] It aims to provide a regulatory framework that allows wider use of stablecoins as a legitimate form of payment.

As a quick refresher, stablecoins are a type of cryptocurrency that has its value pegged to another asset, which is typically a traditional fiat currency like the U.S. dollar. Designed to stay close to a fixed price (typically $1), stablecoins offer a more practical way to make payments via blockchain. With most cryptocurrencies, payments can be risky since the price of the coin can fluctuate dramatically from one minute to the next.

Until now, there was no federal framework governing stablecoins, which limited their widespread use. The GENIUS Act is looking to bring this digital currency into the mainstream by establishing clear rules for how stablecoins must operate, how issuers are supervised, and what protections users can expect.

Holders of stablecoins should understand, however, that these coins do not carry the same safety net as money held in a traditional bank or brokerage account, since crypto assets are not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).^[3]

Key Provisions of the GENIUS Act

The GENIUS Act is designed to help payment companies, financial institutions, and consumers navigate the stablecoin market with greater confidence. While the legislation is long, here are some key highlights.

Stablecoin Definition and Oversight

Under the Act, a stablecoin is explicitly recognized as a “digital asset issued for payment or settlement and redeemable at a predetermined fixed amount (e.g., $1).”^[4] This definition excludes algorithmic stablecoins, which are stablecoins that use complex computerized rules to keep prices stable, leaving them outside the law’s consumer protections.

The Act lays out how payment stablecoins must be issued and regulated. This includes:

•   Licensing: No one may issue or sell a U.S.-pegged payment stablecoin unless they are a licensed permitted payment stablecoin issuer (PPSI). Issuers with over $10 billion in stablecoin issuance can apply federally; smaller fintechs can opt into certified state-level frameworks that meet or exceed federal rules.^[2]

•   Reserves: Stablecoins must be backed with highly liquid assets (such as U.S dollars and short-term U.S. treasuries) on a 1:1 basis.

•   Transparency: Issuers must release periodic public disclosures and submit to routine reserve audits.

•   Consumer protection: In case of insolvency or bankruptcy, stablecoin holders are given priority claims over other creditors when reserves are distributed.

•   Restrictions on yields: Issuers may not offer interest or yield to stablecoin holders to prevent them from functioning like and being perceived as securities rather than payment vehicles.

•   Truth in marketing: Issuers cannot make misleading marketing statements, such as claims that stablecoins are government-backed or legal tender.

•   Compliance: All issuers must comply with the Bank Secrecy Act, enforce strong anti–money laundering measures, and adhere to consumer protection rules.^[5]

Together, these provisions are designed to end the “Wild West” era of unregulated stablecoins and bring the market closer to the rigor of traditional banking regulation and oversight.

Impact on Cryptocurrency Markets

By establishing clear regulatory guardrails, the GENIUS Act legitimizes stablecoins and opens the door to broader adoption of digital assets. The prospect of banks and payment platforms introducing their own stablecoins could further validate cryptocurrencies and push them more toward mainstream financial use.

This growing legitimacy could potentially lead to greater market stability and even improved performance for other crypto assets such as Bitcoin and Ethereum.

That said, the long-term impact of the GENIUS Act on crypto prices and stability is impossible to predict. For now it’s important to remember that crypto as an asset class is still highly volatile and is strictly for buyers with a high tolerance for risk.

Potential Impact on Stablecoins and Crypto Holders

With the passage of the GENIUS Act, stablecoin issuers and crypto holders will need to adapt to a new landscape. Here’s how the legal change could ripple through the markets.

For Stablecoin Issuers

•   Higher compliance costs: Issuers face strict reserve, licensing, audit, and disclosure requirements. Smaller firms may struggle to keep up.

•   Barrier to entry and consolidation: The costs and intricate requirements of the GENIUS Act may favor large institutions for stablecoin issuance, making it more challenging for smaller entities to compete.

•   Greater legitimacy: PPSI status could attract institutional partnerships and boost user confidence.

•   Regulatory consistency: The Act aligns state and federal stablecoin frameworks, ensuring fair and consistent regulation throughout the U.S.

For Crypto Holders and Users

•   Improved transparency: Regular audits and federal oversight will give users more confidence that their stablecoins are truly backed.

•   Stronger consumer protections: Priority in bankruptcy and clear redemption policies reduce the chance that funds will be lost in a stablecoin collapse.

•   Regulatory complexity and delays: The new rules will require significant adjustments from issuers and may lead to initial delays in their operations. Some stablecoins not fully in compliance may need to change structure.

•   Possible higher costs or fewer options initially: Higher operating expenses could be passed on to users via transaction fees. Also, smaller or less well-funded issuers might find the regulatory burden heavy and some could exit or consolidate, reducing competition.

The GENIUS Act and Bitcoin

While the act doesn’t directly regulate Bitcoin itself, its passage aims to increase stability and confidence in the broader digital asset market. This could potentially increase mainstream adoption and interest in cryptocurrencies, including Bitcoin. For those who regularly buy, hold, and sell Bitcoin, this can be seen as a positive development.

At the same time, however, the Act’s emphasis on centralization and compliance marks a shift away from the decentralized ethos that drew many to Bitcoin and other cryptocurrencies. As a result, many crypto users view the GENIUS Act (and other crypto legislation that may follow) with cautious optimism.

Policy Outlook on the GENIUS Act

While the GENIUS Act is now law, it won’t be implemented immediately. It is scheduled to take effect 18 months after the enactment of the GENIUS act or 120 days after federal regulators issue the implementing rules, whichever comes first.

As we move through 2025, federal agencies — including the Office of the Comptroller of the Currency, the Treasury Department, and the Federal Reserve —- will be engaged in rulemaking and formulating guidance to implement the bill’s provisions, a process that could take many months.

In the meantime, we may see even more federal crypto legislation coming out of Washington. The Digital Asset Market Clarity (CLARITY) Act, for example, is currently moving through Congress. This proposed law aims to clarify the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in regulating the crypto market. If passed, it would set standards for the wider crypto industry.

What the GENIUS Act Means for Everyday Crypto Users

For people who use stablecoins as a gateway to crypto or as a digital cash equivalent, the GENIUS Act brings both benefits and new rules to be aware of.

First, the law puts certain safeguards in place for stablecoin users. Issuers can no longer claim their tokens are legal tender or backed by the U.S. government, helping protect users from misleading ads. If a stablecoin company goes bankrupt, holders also get priority in getting their money back ahead of other creditors.

But there are limits to the law. For example, the Act does not guarantee instant redemption of stablecoins or provide deposit insurance, as mentioned above, leaving some risks for everyday users.

Crypto users also need to prepare for tighter compliance. Stablecoin issuers must now follow strict anti-money laundering laws, which means users will face stronger identity checks when buying, selling, or redeeming tokens. Everyday crypto users may also see changes in stablecoins availability, as some stablecoins could disappear, while new federally licensed ones take their place.

The Takeaway

The GENIUS Act is the first significant U.S. crypto regulation. It aims to reshape stablecoins by defining how they must be backed, disclosed, licensed, and protected. For issuers, it introduces heavier compliance but also credibility and access to broader markets. For users, it offers greater safety and transparency, but also imposes new rules that could remove some offerings from the market.

Overall, the GENIUS Act represents a turning point for crypto regulation. By setting a clear national standard for stablecoins, it paves the way for additional legislation and signals that the U.S. government may be ready and willing to integrate digital assets into the financial mainstream in the coming years.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

Learn more about crypto trading with SoFi.

FAQ

What is the main goal of the GENIUS Act for cryptocurrency?

The primary objective of the GENIUS Act is to create the first clear and enforceable federal framework for stablecoin regulation in the U.S. It aims to protect consumers, promote transparency, manage financial stability risks, help prevent fraud and illicit activity, and bolster U.S. dollar dominance in digital payments.

Is the GENIUS Act a law yet?

Yes, the GENIUS Act was signed into law on July 18, 2025, after passing both the Senate and the House. It is set to take effect 18 months after the enactment of the GENIUS act or 120 days after federal regulators issue the implementing rules, whichever comes first.

How does the GENIUS Act define and regulate stablecoins?

Under the GENIUS Act, a “payment stablecoin” must be redeemable at a stable value and backed 1:1 by liquid, low-risk reserves such as U.S. dollars or short-term Treasuries. Issuers must publicly disclose reserve composition monthly, maintain segregation from their own assets, and comply with strict consumer-protection rules. In the event of insolvency, holders’ claims get priority over other creditors. The act also states that payment stablecoins are not considered securities or commodities.^[6]

Will the GENIUS Act impact the price of Bitcoin?

The Act focuses narrowly on stablecoins, so any direct effect on Bitcoin’s price is uncertain. Some market participants expect improved regulatory clarity could increase institutional confidence in crypto broadly, which might buoy demand for Bitcoin and other major coins. However, because Bitcoin is not a stablecoin, its price dynamics remain driven by supply, demand, macro factors, and sentiment rather than these reserve-backing rules.

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About the author

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Article Sources

1. WhiteHouse.gov. Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law.
2. Congress.gov. S.1582 – GENIUS Act.
3. FDIC. Deposit Insurance.
4. Congress.gov. Stablecoin Legislation: An Overview of S. 1582, GENIUS Act of 2025.
5. World Economic Forum. The GENIUS Act is designed to regulate stablecoins in the US, but how will it work?.
6. Congress.gov. PUBLIC LAW 119–27—JULY 18, 2025.

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Photo credit: iStock/Ihor Lukianenko

Cryptocurrency and other digital assets are highly speculative, involve significant risk, and may result in the complete loss of value. Cryptocurrency and other digital assets are not deposits, are not insured by the FDIC or SIPC, are not bank guaranteed, and may lose value.

All cryptocurrency transactions, once submitted to the blockchain, are final and irreversible. SoFi is not responsible for any failure or delay in processing a transaction resulting from factors beyond its reasonable control, including blockchain network congestion, protocol or network operations, or incorrect address information. Availability of specific digital assets, features, and services is subject to change and may be limited by applicable law and regulation.

SoFi Crypto products and services are offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency. SoFi Bank does not provide investment, tax, or legal advice. Please refer to the SoFi Crypto account agreement for additional terms and conditions.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOCRYP-Q325-109

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While the blockchain technology used in cryptocurrencies is generally thought to be highly secure, crypto scams do occur, with fraudsters convincing people to send them crypto payments, transact in fake crypto products, or share their digital wallet details. According to the FBI’s Internet Crime Complaint Center (IC3) 2024 Internet Crime Report, cryptocurrency-related scams accounted for $9.3 billion in victim losses, which represents a steep 66% increase from the previous year.^[1] As scammers get more sophisticated (integrating AI, for instance), it can be more challenging to recognize crypto fraud.

An important step to take is to educate yourself about and then avoid the scams you might encounter in 2025 if you buy, hold, or sell crypto. Read on for advice.

What Are Crypto Scams?

Crypto scams are schemes in which fraudsters trick people into sending cryptocurrency for fake purposes, buying fraudulent crypto products, or revealing their crypto wallet credentials so that funds can be stolen.

Unfortunately, there has been a major uptick in these crimes over the past year. Scammers are becoming more sophisticated, using AI and other tools to appear legitimate. They also often use the same principles deployed in non-crypto financial scams, such as:

•   Slowly building trust, over weeks or even months

•   Creating a sense of urgency, such as, “This opportunity expires in one hour”

•   Exploiting knowledge gaps (such as telling people there’s a serious error with their technology which they can fix)

These scams take many guises. Some involve phishing, in which fraudsters masquerade as legitimate, trusted businesses, to steal crypto. Others are romance ploys, where someone cultivates a relationship with someone only to convince them to transact in a bogus type of cryptocurrency.

The Most Common Types of Crypto Scams in 2025

To help you stay vigilant against evolving cryptocurrency fraud, here are 10 common scams to know about for 2025 and beyond. Learning how these schemes operate is the first step toward avoiding them.

1. Pig Butchering Scams

Pig butchering is an admittedly unpleasant name for a scam in which perpetrators win the trust of victims over time and convince them to buy fake crypto assets. The scammer, who often appears wealthy and financially savvy, might meet someone on social media, a dating app, or via a text message.

They may share stories about their life and send alleged selfies, but find excuses not to meet in person or have video calls. Eventually, they offer to help their target pursue buying crypto so they too can profit. However, the scammer directs the person to an illegitimate platform that steals their money.

Why is it called “pig butchering”? That turn of phrase refers to the practice on a farm of fattening up pigs before they are slaughtered. Scammers “fatten up” their victims with ongoing attention, securing their trust to more easily cheat them.

2. Rug Pulls

A rug pull scam involves a supposed crypto developer talking about a great new project (a new kind of crypto or NFT, perhaps) that will be a lucrative opportunity. The scammers often create hype on social media, promising high returns or innovative technology to attract investors. Once enough people invest and the token’s value rises, the creators abandon the project or disappear, taking the raised assets with them. This leaves the participants with worthless tokens.

The “rug pull” name comes from the saying about pulling the rug out from under someone. The scammer makes their victim feel as if they will reap a considerable profit, but when the rug gets pulled, they are actually left with nothing.

3. Romance Scams

In a romance scam, the fraudster forms a romantic relationship with the victim. The scheme often starts on a dating app or social media, where the scammer builds a fake persona (often attractive, trustworthy, and emotionally available) to gain the victim’s affection and trust.

In some cases, the scammer will cultivate a relationship over months or even years. Eventually, they will suggest that the victim buy into a profitable crypto opportunity. They might even position it as a way to grow funds for a wedding or purchasing a home together. However, it’s just a way to whisk their “darling’s” money away.

4. Fake Exchanges and Wallets

Scammers are getting so good at their pursuits that it can be almost impossible to tell what’s real and what’s fake. That’s what fuels fake exchange and wallet scams. A victim might receive communication about or see an ad for what seems to be a legitimate and possibly even well-known crypto exchange or digital wallet. There might even be a celebrity endorsement involved (this could be an AI-generated deepfake) and/or claims of major returns on a slick-looking site.

However, these can be fraudulent offerings that look almost identical to real crypto exchanges and wallets. If a crypto buyer, holder, or seller interacts with these fake platforms, they can have their funds stolen.

5. Phishing Attacks

In a phishing attack, scammers reach out to victims, often by email, text message, or social media communication, saying there’s an urgent problem with an account that needs attention. Targets are then lured into clicking fake links and entering their private information (such as private keys or wallet passwords) on cloned platforms, giving attackers access to their funds.

6. Giveaway and Airdrop Scams

In this scheme, scammers trick people into sending cryptocurrency or sharing personal information under the guise of receiving free tokens. Scammers often impersonate well-known companies, influencers, or crypto projects on social media, claiming to host “giveaways” or “airdrops” (a method used by blockchain projects to distribute free cryptocurrency tokens to users’ digital wallets).

To qualify for the freebie, users must typically first send a small amount of crypto to “verify” their wallet. In reality, victims never receive anything in return, and the scammers disappear with the funds.

7. Pump and Dump Schemes

A pump and dump scheme in the crypto world is a fraudulent practice in which scammers create or acquire large amounts of a low-value crypto and promote it to inflate the token price artificially. They then sell this “in-demand” crypto to unwitting individuals.

That’s the “pump” part of the process. Then comes the “dump,” when scammers sell off their tokens at this inflated price. The supply of the token then soars, the price typically plummets, and the buyers are left with worthless holdings.

8. Ponzi and Pyramid Schemes

Ponzi and pyramid schemes in crypto are fraudulent scams that promise high returns with little or no risk. It’s another type of “get rich quick” scheme. In a crypto-based Ponzi scheme (named after 1920s con artist Charles Ponzi^[2]), the victim thinks they are transacting with a legitimate form of cryptocurrency that will have solid returns. However, when they buy coins, they are actually funding returns to those who paid into the offering earlier. The scheme relies on a constant inflow of new money to appear profitable and it collapses when new investments slow down.

Crypto pyramid schemes, on the other hand, depend on recruiting new participants. Members earn money (typically free tokens) primarily by bringing in others rather than from genuine investment. New recruits pay into the system, with a portion of their fees going to the person who recruited them and those above them in the “pyramid.” The scheme collapses when it’s impossible to recruit enough new people to pay everyone, leaving most participants at the bottom with losses.

9. Impersonation and Fake Support Scams

In these cryptocurrency scams, the orchestrators pretend to be allied with well-known companies. Typically, they reach out using authentic-looking emails, text messages, social media messages, or computer pop-ups, or by a phone call. Often, their ruse is to say there is an issue with the victim’s account, and that their money or credentials are at risk. In order to get the problem fixed, the victim needs to buy crypto and send it their way.

In another version of this scam, the fraudsters claim to be working for an established or new business that is now issuing their own crypto coin or token. They might have a legitimate-looking website, press releases, and news articles to back up their claim. This is false, and if you purchase the new offering, you are left with nothing of value.

10. Malware and Remote Access Scams

In this crypto crime, scammers steal people’s coins in one of two ways. In a crypto malware scam, fraudsters trick users into downloading malicious software, often through phishing emails, fake apps, or fraudulent websites. The software then steals private keys or passwords to transfer funds to the attacker’s account.

In a remote access scam, the criminal convinces the victim that there is a problem with their hardware or account access, which can be repaired via remote access. Once the target allows access, the scammer may direct them to log into their crypto exchange, claiming they need to “secure” their funds. This allows the attacker to steal sensitive information or drain their crypto assets.

Examples of Cryptocurrency Scams

Here are two examples of well-known cryptocurrency scams to be aware of and learn from:

•   As reported by CNN^[3], Dennis Jones, an 82-year-old grandfather, was befriended on Facebook by a woman he believed was named Jessie, who gradually encouraged him to buy crypto. Having full trust in Jessie, Jones complied and ultimately invested everything he had. Then one day, Jessie — and all of the money he invested — disappeared, leaving him in ruin.

•   An example of a rug pull unfolded with BitConnect.^[4] Its BitConnect Coin (BCC) promised returns of up to 40% per month. As the government began looking into claims that it was a Ponzi scheme, BitConnect shut down in January 2018, wiping out $2 billion in consumer funds.

How to Protect Yourself from Crypto Scams

Knowing the top crypto scams to watch out for in 2025 is one step towards protecting yourself. But since scammers continually develop new ploys and crypto transactions usually are not reversible, also follow these tips:

•   If you are told you must pay in crypto, you are likely dealing with a scammer.

•   When you hear about “guaranteed” returns on crypto, you are probably dealing with an untrustworthy individual or business, according to the Federal Trade Commission (FTC).

•   Be wary of crypto offers via email, text, phone, or on social media that claim to come from a well-known brand or business. This might be a scammer engaging in impersonation. Rather than immediately engage, look up the company’s official contact details and reach out that way.

•   Don’t let dire warnings that your bank account, crypto account, or computer are at risk rattle you. A sense of urgency is a tool scammers often use. Don’t rush to click on links, reveal sensitive information, or pay in crypto. Slow down, and again contact the supposedly at-risk account via publicly-available information.

•   Dating and crypto don’t mix. Whether you’ve been seeing someone for a week or a year, if they are guiding you toward crypto transactions, it may well be a scam.

•   Be cautious with the promise of free cash or crypto, especially excessively generous offers. This could be a ruse, as described above.

•   If you are transacting in crypto, opt for reputable platforms and verify the URL carefully. Scammers can create fake platforms that are just one letter off.

•   To protect your accounts, use multifactor authentication (MFA) to enhance security. Use unique passwords as well.

•   If you believe you’ve been the victim of crypto fraud, report the scam as quickly as possible to the authorities (including the FTC and the FBI’s Internet Crime Complaint Center), as well as the cryptocurrency exchange company you used to send the money.

The Takeaway

While crypto blockchain technology is generally thought of as transparent and secure, scams related to crypto are unfortunately rising. Being aware of the common ploys and staying alert to emerging ruses is an important step in protecting yourself when buying, holding, and selling crypto.

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FAQ

What is the most common type of crypto scam?

According to the FBI, one of the most common types of crypto scams is what is known as pig butchering. In this scenario, the scammer wins the confidence of a person and convinces them to transact with what winds up being fake crypto.

How can you tell if a crypto website or offer is fake?

Some ways to identify a fake crypto website or offer are as follows: a URL that is slightly different from the expected name and spelling; unrealistic promises (such as guaranteed growth); lack of contact details or full list of team members’ names; pressure to act quickly; low-quality websites; and issues with withdrawing funds.

What is a pig butchering scam and how does it work?

A pig butchering scam is a type of long-term fraud where scammers develop a relationship with a victim over weeks or months before persuading them to get involved in a fake online cryptocurrency scheme. The term describes the process of “fattening up” a victim with false affection and trust before “slaughtering” their finances.

Can you recover money lost in a crypto scam?

Getting money back from a crypto scam is difficult because crypto transactions are usually irreversible. That is why it is especially important to be aware of common and emerging crypto scams to protect yourself. If you do lose funds this way, report the crime as quickly as possible to government authorities and the local police. Be highly suspicious of “recovery companies” that contact you, as these are likely another scam to get more money from you.

Are crypto airdrops and giveaways usually legitimate?

Crypto airdrops and giveaways can be a legitimate promotional method. However, they are also used by scammers, so it’s important to do your due diligence when considering an offer. Signs that you may be dealing with a scam include the lack of an official announcement, promises of unrealistically generous rewards, URLs that are similar to a legitimate address, requests for private keys, grammatical errors, and low-quality graphics.

Article Sources

1. FBI. FBI Internet Crime Report 2024.
2. U.S. Securities and Exchange Commission. Ponzi Schemes.
3. CNN. Killed by a scam.
4. U.S. Securities and Exchange Commission. Complaint against BitConnect.

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Photo credit: iStock/chekyfoto

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