The Tax-Smart Crypto Play: Why Borrowing Against XRP Beats Selling
Instead of selling XRP and triggering capital gains taxes, top investors are borrowing against their holdings to access cash. Legal, strategic, and tax-efficient — this move could save thousands while keeping upside intact.

The Hidden Cost of Selling Crypto
You bought XRP at $0.30. It’s now $0.60. You need cash.
Your instinct? Sell.
But here’s what you might not realize: every sale is a taxable event. Whether you’re cashing out to fiat or swapping into another crypto, the IRS (and many global tax authorities) see it as a disposal — and they want their cut.
Enter Versan Aljarrah, co-founder of Black Swan Capitalist, who’s calling out a smarter alternative:
“Borrowing against $XRP collateral might be the smartest tax move in crypto.”
And he’s not alone. He’s echoing Andrew Gordon, a leading crypto tax attorney, who confirms: Loans aren’t taxable.
That simple truth is reshaping how savvy investors manage their wealth.
How It Works: Use Crypto as Collateral, Not Cash
Imagine this:
You hold 100,000 XRP. At $0.60, that’s $60,000 — up significantly from your cost basis. Selling would trigger a taxable gain.
Instead, you pledge your XRP as collateral on a lending platform or through a financial partner. In return, you receive $30,000 in cash (typically at 50% loan-to-value).
No sale. No tax. No lost position.
You still own every XRP. If the price surges to $1, $2, or beyond, you capture all of that upside — tax-deferred.
Why This Is a Game-Changer for Long-Term HODLers
For believers in XRP’s long-term potential — especially amid Ripple’s ongoing legal evolution and global payment integrations — selling is emotional and expensive.
Borrowing changes the game:
- Preserve your position: Keep riding the wave without resetting your cost basis.
- Access liquidity: Pay for real-life expenses, investments, or emergencies.
- Avoid short-term capital gains: Which can hit up to 37% when combined with state taxes.
- Maintain tax efficiency: Especially powerful in high-growth scenarios.
As Gordon notes:
“If you’re confident in long-term appreciation, borrowing instead of selling is often a very effective tax strategy.”
It’s not tax evasion. It’s tax optimization — the same tool used by billionaires, not just crypto traders.
The Risks: It’s Not Free Money
Let’s be clear: this isn’t risk-free.
- Interest payments: You’ll pay interest on the loan — typically 5–10% APR, depending on the lender.
- Liquidation risk: If XRP drops sharply, your collateral could be seized to cover the loan.
- Repayment obligation: The debt doesn’t disappear. You must repay it, regardless of market conditions.
That’s why this strategy works best for:
- Stable, long-term holders
- Those with conservative loan-to-value ratios
- Investors with reliable income to service debt
Over-leverage? That’s how fortunes get wiped out.
Strategic borrowing? That’s how wealth compounds.
XRP: A Natural Fit for This Strategy
Aljarrah’s focus on XRP isn’t random.
XRP has unique traits that make it ideal for collateral use:
- High liquidity and global exchange presence
- Established institutional interest in cross-border payments
- Regulatory clarity emerging post-Ripple lawsuit
For investors who believe XRP is undervalued and poised for adoption by banks and payment providers, selling now would mean missing out on potentially exponential gains. Borrowing lets them have their cake — and eat it later.
The Bigger Picture: Crypto Finance Grows Up
This isn’t just about XRP. It’s about a maturing mindset in the crypto world.
The early days were about trading, flipping, and FOMO.
Now, the smart money is thinking like financiers:
- Asset utilization over liquidation
- Tax efficiency over quick cash
- Long-term compounding over short-term gain
As regulations evolve, strategies like collateralized loans will likely become standard practice — not just for whales, but for everyday investors who want to build generational wealth.
The Bottom Line: Think Like an Owner, Not a Trader
Selling feels good. Cash in hand. But it often comes at a steep cost.
Borrowing against your crypto? It’s quieter, smarter, and far more strategic.
As Aljarrah and Gordon suggest:
If you’re bullish on XRP — or any crypto — the smartest move might not be to sell… but to leverage.
Just remember: with great power comes great responsibility.