Short answer. For most people holding crypto personally, the structure is a single-member LLC formed in Wyoming. Two variations exist: a married couple in a community property state can use a qualified joint venture, and blood relatives can use a family limited partnership. Moving your own coins into an entity you control is usually not a taxable event, though there is one exception worth knowing about. Below roughly fifty to eighty thousand dollars in portfolio value, the formation cost is hard to justify.
Which structure fits
| Who it is for | Federal tax treatment | |
|---|---|---|
| Single-member LLC | One owner. The default. | Disregarded entity: the IRS looks straight through it to you |
| Qualified joint venture | Married couple, community property state | Each spouse reports their share; no partnership return |
| Family limited partnership | Multiple family members, related by blood | Partnership |
The single-member LLC is the common case. The IRS treats it as a disregarded entity by default, which means it does not file its own federal return and its activity lands on yours.
Moving crypto in: why it is usually not a taxable event
This is the part people get wrong in both directions, so it is worth being precise about the mechanism rather than repeating the headline.
Single-member LLC. Because the entity is disregarded for federal tax purposes, there is no transfer to report. You held the asset before and you hold it after. Nothing was sold, so nothing was realized.
Multi-member LLC or family limited partnership. Different reason, same result in the ordinary case. IRC section 721(a) provides that no gain or loss is recognized when property is contributed to a partnership in exchange for a partnership interest.
The exception nobody mentions. Section 721(b) switches that off where the partnership would be treated as an investment company if it were incorporated. In practice that is the diversification test: if several people each contribute a different appreciated asset into one entity, the contribution can be treated as a taxable diversification rather than a tax-free contribution. A single owner contributing their own coins does not trip it. Two or three people pooling different holdings can. If more than one person is funding the entity with appreciated assets, that question goes to a tax professional before anything moves.
What Wyoming actually gives you
Four things, and they are separable. Jake forms in Wyoming for all four together, but it is worth knowing which one you are buying.
- Charging order as the exclusive remedy. Under the Wyoming Limited Liability Company Act (Wyo. Stat. Title 17, Chapter 29), a creditor who wins a judgment against you personally gets a charging order against your membership interest. That is a lien on distributions. It is not an order handing them the assets inside.
- No state income tax. Confirmed by the Wyoming Department of Revenue.
- Members are not named in the public formation filing. Wyoming's Articles of Organization ask for the registered agent and the organizer, not a member roster. See the Wyoming Secretary of State for what each filing actually requires.
- Digital asset statutes. Wyoming has legislated specifically on how digital assets are classified and held, which most states have not.
Where the protection stops
Jake's summary on camera is that with the corporate veil in place a creditor "can't take the assets." That is the right instinct and it is worth stating more carefully, because the gap between "hard to reach" and "unreachable" is where people get hurt.
A charging order limits the remedy. It does not make assets disappear. Three things still cut through:
- Fraudulent transfer law. Moving assets into an entity after a claim exists, or while one is foreseeable, can be unwound. The structure has to predate the trouble.
- Alter ego and veil piercing. If the LLC has no separate bank account, no operating agreement, and personal spending runs through it, a court can treat it as you wearing a hat. This is why the maintenance work matters more than the formation.
- Single-member scrutiny. Charging order protection was built for multi-member partnerships, where the point is protecting innocent co-owners. Wyoming extends the exclusive remedy to single-member LLCs by statute, which is stronger than most states, but a creditor litigating outside Wyoming may argue their own state's law applies.
None of that is a reason to skip the structure. It is the reason the paperwork and the separation are the product, not the filing receipt.
What a complete setup includes
The filing is the small part. Jake's point is that most people do not know what the rest of the list even is:
- Articles of Organization filed with the state
- An operating agreement, drafted for your situation rather than a template
- An EIN from the IRS
- A registered agent in the formation state
- A banking memorandum, so the account can actually be opened
- A certificate of good standing
- Ongoing corporate veil maintenance: annual report, separate accounts, documented contributions and distributions
DAG's own writeup of the errors that come up most often in Wyoming crypto LLC setups covers the failure modes in more detail, and its crypto LLC formation hub collects the procedural questions: operating agreement contents, EIN registration, documenting contributions, and dissolving an entity later.
When it is not worth it
Jake is direct about this and it is the most useful thing in the recording. Below roughly fifty to eighty thousand dollars in portfolio value, the formation and maintenance cost outweighs what you get, and the same money does more if it just keeps buying. The structure earns its place once the portfolio is large enough that losing it to a personal judgment would be a real event.
Whether you work with us or not, all good either way. Just make sure you understand what you're doing and you're working with professionals, or you've done a lot of research if you're going to do it yourself.
Jake Claver, QFOP, recorded February 2026
Common questions
Does a Wyoming LLC have to be formed by a Wyoming resident?
No. The requirement is a registered agent with a Wyoming address, not an owner with one.
Do I need an operating agreement for a single-member LLC?
The state does not file one, which is why people skip it. Skip it and you have removed the main document showing the entity is separate from you, which is the document that matters if the veil is ever challenged.
Is transferring my crypto into the LLC a sale?
For a single-member LLC, no: the entity is disregarded, so there is no transfer to report. For a multi-member entity, section 721 generally provides nonrecognition, subject to the investment company exception described above.
Which comes first, the LLC or the trust?
Jake sets up the LLC first because it is faster, then the trust. The reasoning, including why you may want an LLC both inside and outside the trust, is in trust or LLC, which one to do first.
What does it cost?
It varies by state and by how much of the work is done for you. DAG publishes a breakdown of formation costs across states.
- Wyoming crypto LLC: the full guide on jakeclaver.com
- Benefits of setting up an LLC
- LLC setup: doing it right
This page summarizes recorded commentary and general information. It is not investment, tax, or legal advice, and it is not a recommendation to form any entity or to buy or sell any asset. Nothing here accounts for your situation. Speak to a qualified attorney and tax professional before acting.