If the crypto is a capital asset, you can sell it to generate a capital gain that can then be invested in a Qualified Opportunity Fund (QOF). If you invest the crypto itself, you'll get "mixed asset" treatment, which is not ideal.
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How can I use money earned from crypto currency to invest in a QOF to defer paying taxes?
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A gain from cryptocurrency (if held as a capital asset) is just like any other capital gain that can be invested in a Qualified Opportunity Fund (QOF). But be sure to convert the cryptocurrency into dollars (thereby triggering the gain) before investing in a QOF. If you simply transfer cryptocurrency with unrealized appreciation to the QOF, the portion of the QOF interest acquired for such appreciation will not be treated as a qualifying investment. In addition, the remaining portion of the QOF interest will not be a qualifying investment either, except to the extent that you have gains from other sources that you can defer.
Any long term capital gain can be deferred by investing the gain in a Qualified Opportunity Zone.
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