Ben McLannahan in New York and Vanessa Houlder in London Cryptocurrency converts across the US have had to contend with zigzagging prices and glitch-prone exchanges. Now comes another problem: the tax authorities.

Hundreds of thousands of newcomers swarmed into bitcoin and other digital currencies last year, sending prices soaring. But as the 2018 tax-filing season arrives, many may be unaware that they could need to write a cheque to the federal government.

Four years ago the Inland Revenue Service said that virtual currencies should be treated the same as property and thus liable for capital gains tax. For investors who cashed in before December 31 and spent the profits, “it could be a pretty sobering awakening”, said Mike Slack, an analyst at H & R Block, a tax-preparation company.

Despite a slump in prices — Bitcoin fell below $8,000 yesterday, down almost 60 per cent from its December high — crypto-fever remains strong. When a free stock-trading app called Robinhood recently said it would offer commission-free trades in a variety of cryptocurrencies, more than 1m people signed up within just four days.

Meanwhile, crypto exuberance has spilled into unconventional stocks more broadly. Tim Hockey, chief executive of TD Ameritrade, a leading US online broker, said he had “never seen this absolute level of trading”, noting particular interest in shares related to blockchain technology and cannabis. Read more from…

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