I’ve invested crypto into a legally traded hedge fund company. They have a master account where they manage my funds. However, I have an account set up by them where I can see my investment in dollars even though it’s technically still in crypto and I can choose to withdraw my investment or continue to grow it. The company trades daily and provides me a return (profit based) every week (Fridays) between 2-4%. I then take the profit I earned and move it over to my current trading balance to grow my account (compound my investment).
I do have the option to withdraw any amount of my investment. The company would send the crypto from their e-wallet they use to my e-wallet (Coinbase or Gemini). Once I receive my requested amount in my e-wallet I would change the crypto back to dollars.
My question is if I am not the one physically trading every week, I haven’t pulled out any returns I’ve made, and I continue to reinvest the money in my trading balance that the company manages will I still be responsible for reporting those transactions to the IRS?