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Shiba Inu risks: what holders face and how to stay safe

Shiba Inu carries sharp price swings, no backing and hype-driven demand. The IRS taxes it as property, and phishing and token approvals drain wallets.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

Illustration: World-Crypt

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What are the main risks?How do I store Shiba Inu safely?How do US taxes and regulators treat it?What is Shiba Inu and who created it?How is it different from Dogecoin?FAQ

Key takeaways

Nothing backs SHIB.
Cash markets are largely unregulated.
The IRS taxes crypto as property.

Short answer

The main risks of holding Shiba Inu are sharp price swings, no intrinsic value and dependence on community hype. Nothing backs it, so buyers alone set its value.

Shiba Inu is a cryptocurrency ecosystem on Ethereum, led by its community rather than a company. Its main token, SHIB, is used for trading and payments inside it.

What are the main risks?

SHIB pays no income and backs no asset. The US CFTC warns that virtual currency is not backed by any government and that supply and demand alone set its value. Cash markets for it are largely unregulated and can be manipulated, and demand often follows online attention that fades.

How do I store Shiba Inu safely?

SHIB is a token on Ethereum, so you need a wallet that supports that network. The seed phrase is the master key to it.

Keep large holdings in a hardware wallet, with the seed phrase offline.
Revoke token approvals you no longer use.
Check the contract address, because copycats use the same name.
Treat airdrops and direct messages as phishing.

How do US taxes and regulators treat it?

The IRS treats cryptocurrency as property, not money. Buying SHIB with US dollars is not taxable, but selling it, swapping it for another crypto or paying with it usually is.

The SEC has brought enforcement cases against other tokens it calls unregistered securities, and it decides case by case. The CFTC warns that cash-market platforms may lack basic customer protections.

What is Shiba Inu and who created it?

Shiba Inu launched in August 2020 as a meme-based project. Its creator, an anonymous developer called Ryoshi, stepped away, and no company controls it now.

The project says it runs on three tokens: SHIB for payments, BONE for governance through the Doggy DAO, and LEASH as an incentive. Shibarium, a Layer 2 network, uses BONE for fees.

How is it different from Dogecoin?

Both started as jokes, but they are built differently. Dogecoin has its own blockchain, while Shiba Inu is a set of tokens on Ethereum.

Shiba Inu and Dogecoin compared
Item	Shiba Inu	Dogecoin
Network	Tokens on Ethereum	Its own blockchain
Launch	August 2020	December 2013
Main use	Trading and payments	Tipping and payments

Frequently asked questions

US law does not name it one. The SEC decides case by case with the Howey test, which asks whether buyers expected profits from other people's work.

SHIB exists on Ethereum, so a wallet on another chain has no record of it. The tokens are usually lost.

Mainly inside its own ecosystem, where people trade it on ShibaSwap. It is rarely accepted in everyday shopping.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.