How to Track Crypto Spending Separately From Your Investment Portfolio

Most portfolio trackers are created to answer one question: How are my investments doing? Of course, this works great as long as every wallet only contains assets that one wants to hold or trade. However, as soon as some of the crypto in a wallet is being spent (e.g. on NFTs, on subscriptions or on discretionary entertainment) then this spending will be included in the investment performance.

Most of the tools for tracking portfolios are designed to answer one question very well: how are your investments doing. To help answer this question, the tools for tracking portfolios normally treat every wallet as if it only contains assets that you intend to hold or to trade. This can work fine for people who have crypto in their wallets that they intend to hold or to trade. It is, however, very different from people who have crypto in their wallets that they spend from time to time, including on NFTs, subscriptions and other discretionary spending.

Please note that while gambling with crypto assets involves risk, you must not gamble with funds you can’t afford to lose. All online crypto casino platforms and resources we feature here on CryptoCasinos are 18+ only, and you should therefore always check your local laws before signing up to any online crypto casino to play for real money. Gamble responsibly!

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Why Spending and Holding Get Blurred Together

Each wallet usually holds different types of assets. A person may hold crypto assets for long-term holding or for active trading of various types of assets. In many cases, wallets are used for everyday spending, such as purchases, subscriptions, or for discretionary entertainment. All of these types of assets and transactions are typically stored in a single wallet.

Your tracker by default will treat all of your outgoings as losses. Without tags it will not be able to tell the difference between a loss making trade and a spend of discretionary funds.

The way in which your discretionary spending of your crypto assets are reported can affect your overall return on investment. Therefore, if you are spending your crypto assets on a number of different items, including online casino games, it would be wise to track the return on your different categories of spending in order to gain a better understanding of how your different categories of spending are affecting your overall return on investment.

Money spent on a subscription to a service, for example a streaming service, carries a different risk profile than money spent playing a game of chance for example in an online casino. However, both types of spending will show up as an outflow from your wallet.

Tax implications - how you report your spending for tax purposes can differ based on whether you are holding or using your cryptocurrencies to make purchases.

All this said, it still matters that we are accurately calculating our returns, as opposed to just adding up the numbers.

How to Actually Separate the Two

To separate your spending from your investments in your portfolio, you should maintain a separate spending wallet. You can then fund this spending wallet from time to time with money from your main wallets holding your investments. Every outflow from your spending wallet will then be clear that it is a discretionary outflow rather than an outflow as a result of your investment activities. Most portfolio trackers then allow you to label your wallets with custom labels. You can then exclude your spending wallet from your returns in your portfolio tracker. It will then still show all of your outflows, but you can separate out your spending from your investment activities.

In the case of small amounts, for example of entertainment in online casinos for money, it is essential to record all transactions, in order to accurately assess their impact on the investment. Online casinos that accept crypto payments have their own evaluations for aspects such as licensing, fairness of games, and transparency of payments, and it is worth taking a moment to visit CryptoCasinos to see how those evaluations actually get made before choosing a platform to play with your money.

A Simple Framework for Categorizing Crypto Outflows

1. Tag every outflow at the point of transaction rather than trying to reconstruct categories later.

2. Separate discretionary spending wallets from holding or staking wallets entirely.

3. Exclude discretionary spending from return calculations so investment performance stays accurate.

4. Spend time to review your spending categories as your habits change over time and new platforms emerge.

5. Keep records sufficient to ensure proper reporting of taxes and other laws and regulations in jurisdictions in which you hold Crypto Assets.

So little to do. All you have to do is tag every transaction when you do it, before you lose the ability to do so. Then review your spending every now and then, in order to make sure that your view of your spending is still up to date.

What This Reveals About Portfolio Hygiene Generally

Note: Separating out spending money from investing money is not unique to crypto. It is the same thing as keeping separate checking accounts and brokerage accounts. In crypto, wallets are used to hold addresses, not money, and each address can be used for both spending money and investing money.

Separating to track spending on a regular basis will have a far greater value than just as mentioned above for tracking entertainment. All gas for transactions, NFTs, as well as other typical ‘outflows’ for specific categories not included in an investment strategy should be separated for tracking. Eventually it will become very simple and actually a habit to categorize for tracking purposes at the time of transactions in a portfolio tracker, within minutes even for a large number of transactions for a year end review of actual investment performance.

Reconstructing past transactions to sort out the spending from the investment decisions can be very time-consuming and could take hours to sort out months of transactions. On the other hand, if all of the past transactions have been tagged for spending as they have occurred then a report can be pulled and sorted out in a matter of minutes.

Responsible Gambling

We reference platforms in this guide that allow for the implementation of responsible gambling features, such as set deposit limits, loss limits, and self-exclusion features. If you feel you may have a problem with responsible gambling, there are confidential support organizations available. The tracking of discretionary spending does not include risk assessment as to whether or not the activity in question may be problematic for the gambler.