Why stocks and crypto are the hottest holiday gift this year

More holiday gifts might come in liquid form this holiday season. Instead of cash, gift givers are considering giving a slice of Wall Street and cryptocurrency for the first time to family and friends as crypto and investing become more mainstream.

Nearly a year after Wall Street was rocked by a social media-driven swell in GameStop and AMC shares, more nonprofessional investors are diving into trading stocks to secure savings for retirement or make extra income — and they want to share the wealth for the holidays.

Nick Edwards, who works in health care sales in Indianapolis, told NBC News he plans to spread about $1,000 on cryptocurrency or stocks for his close family members this year as a Christmas gift. 

“I’ve always taken pride in gift giving, not just a standard Amazon gift card or Best Buy gift card,” he said. “What’s the best gift I could get someone? And to me the only logical thing is Bitcoin, because it’s the best value asset that we have today.”

Edwards first became interested in investing in 2018, in part because it offered him a way to make additional money and avoid the type of financial precariousness he grew up in as a child of a single mother. He first started with stocks, and more recently has started trading Bitcoin to help fund his retirement. But when his nephew turned 4 years old, Edwards decided to plant an investment seed for him in the form of Bitcoin.

“I am hoping the real gift is to get them [family members] to start using or buying Bitcoin more,” he said. “So, wrapping it as a gift is my Trojan horse entry into getting them to start buying more. Long term, that’s really my goal.”

Over the last year, retail trading has boomed in large part driven by Reddit, Twitter and TikTok finance enthusiasts and enabled by free trading platforms including Robinhood and Cash App Investing by Block (formerly known as Square).

Vlad Tenev, CEO of Robinhood, told investors in an earnings call in October the company now has more than 22 million accounts, a 97 percent increase from last year. Customers placing equity trades were up 24 percent from last year and 287 percent for crypto, the company added. Cash App, a money transfer app, has grown to 40 million monthly active users, which is twice as many as it had in 2019 when it launched its investing product. 

“We’ve grown a more engaged, higher-performance population of actives,” said Block CFO Amrita Ahuja. “What that means is it enables us to invest into bringing more people into Cash App and to bring in more people who are more likely to adopt more products into Cash App, who have potentially higher spending power.”

Block has doubled down on its marketing to bring more retail investors into its trading platform. Artists Miley Cyrus and Lil Nas X both teamed up with Cash App this year to give away $1 million to users for investing. Megan Thee Stallion also partnered with the company to give away $1 million in stock and created an introductory investing tutorial on YouTube called “Investing for Hotties.”

“There has been bigger growth [in trading] throughout the entire pandemic,” said Victor Wang, CEO of investment app Stockpile. “People are seeing financial opportunity investing and investing has not been as narrow as expected. They think, ‘Oh, I can do that, too. I don’t have to be a really rich person to do that.’”

With more people piling into online communities for investing, people had more energy and support to navigate stocks and trade, he said. The pandemic and soaring unemployment also meant people had more time on their hands to research investing, he added. 

Yaneli Orrala, a 33-year-old bank teller in Los Angeles, told NBC News that she started an online investment account after seeing Dogecoin trending on Twitter this year. She first invested in Dogecoin on Cash App, then opened a Robinhood account to start trading mainly electric vehicle company stocks. So far she’s made “a couple thousand dollars” investing $20 here and there, she said.

“My parents came [to the U.S.] in the early ’80s and purchased a home, so for them they’re set and waiting for retirement,” said Orrala, who is first-generation Mexican-American and first in her family to attend college. “But I’m thinking more like, ‘That’s how they did it, but let me do something different.’ I’m thinking about making money, instead of ‘This is your salary’ and living by that.”

She’s considering giving her brother and a few close family members $100 over Cash App for Christmas to invest on their own.

“I want to bring them and make them more aware of what’s going on,” she said. “I think we are going to run on some kind of coin in the future. … I know I sound crazy but I truly believe this.”

Apps like PayPal, Venmo and Cash App have made it simple for people to send cryptocurrency to anyone with an account. Some platforms charge a fee, but otherwise it moves from account to account like cash. But stocks are more difficult to give because most brokerage firms require a receiver to have an account and the gift giver must know that account information, Wang said. Stockpile and Cash App are currently the only platforms that sell gift cards for stocks, with Cash App announcing this week that users can gift Bitcoin even if the account owner does not own any cryptocurrency or stocks. Robinhood’s Tenev told investors in October that gifting stocks is “definitely something that we’ll consider for the future.”

Gifting stocks does comes with some snags, however. “It could take a bit more planning — if the recipient has the same brokerage the transfer may be quicker,” Mike Loewengart, managing director of investment strategy of E*Trade Financial, told NBC News in an email. “And keep in mind the original cost basis of the gifted securities carries over to the recipient.”

Receipt of the stock gift is not considered taxable income, regardless of the amount, said Eric Bronnenkant, head of tax at online financial advisory service Betterment. But, if the donor gifts more than the annual exclusion of $15,000 to an individual person, then a gift tax return needs to be filed — but no gift tax is due until gifts exceed the lifetime gift exemption of $11.7 million. Beginning in 2022, the annual exclusion will be $16,000 and the lifetime gift exemption cap will be $12.06 million.

Edwards said giving Bitcoin and stocks this year could also be the beginning of a learning moment on finances. 

“With inflation and all that, it just kind of pains me to think that my family works hard for everything they earn and their wealth or value is getting eroded,” he said. “I’ve done the work and come to the conclusion that the best thing to do is give them Bitcoin and help them understand. It’s kind of an obligation.”