I've seen quite a few people recently talking about using something like BlockFi to borrow USD against their BTC, instead of selling and paying CGT. How does this work?
Say I want to buy a new car for $40,000. I have some BTC I bought years ago for cheap, but don't want to pay CGT by selling my BTC to pay for the car.
In theory I could borrow $40,000 from BlockFi and put up 1 BTC as collateral, right? Then I use that $40,000 to buy the car.
But I still have to pay back the loan - won't I have to sell 1 BTC on an exchange in order to pay off the $40,000 (+ interest) loan? Thereby incurring CGT on that exchange transaction?
Is there something I'm missing here? I can't see how crypto-backed loans help avoid tax at all
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