How crypto is taxed

The general principle

Most tax authorities treat cryptocurrency as property or an asset rather than as currency. That single decision drives almost everything else, because disposing of an asset generally triggers a gain or loss that must be calculated and reported.

Actions that are usually taxable

• Selling crypto for ordinary money. The obvious one.
• Swapping one crypto for another. This surprises people most. In most jurisdictions trading Bitcoin for Ethereum is a disposal of the Bitcoin at market value, generating a gain or loss — even though no conventional money was involved and nothing was withdrawn.
• Spending crypto on goods or services. Normally a disposal at market value at the moment of spending.
• Receiving staking or mining rewards. Frequently treated as income at the value when received, and then subject to capital gains again when later disposed of.
• Some airdrops, depending on jurisdiction and circumstances.

Actions that usually are not

• Buying crypto with ordinary money and holding it.
• Moving crypto between wallets you control. Transferring is not disposing — though you should keep records showing the wallets are both yours.
• Holding through price rises. Unrealised gains are generally not taxed.

Why record-keeping is the hard part

To calculate a gain you need the acquisition cost and the disposal value of each unit, in your local currency, at the time of each event. That is straightforward for a handful of purchases and quickly becomes impractical if you have traded actively, used multiple platforms, or interacted with DeFi.

Jurisdictions also apply different matching rules for identifying which units were sold — some use average cost, others specific identification or same-day and short-window rules. Getting this wrong changes the calculated gain considerably.

Practical advice: keep records from the start. Date, asset, quantity, value in your currency, fees and which platform, for every transaction. Reconstructing three years of activity from exchange statements after the fact is genuinely miserable, and some platforms no longer exist to provide them.

Losses

Most jurisdictions allow capital losses to offset gains, and often to be carried forward. Given crypto’s volatility this can matter, but it usually requires the loss to have been properly realised and reported. Losses cannot generally be claimed on assets you still hold, and rules on worthless or inaccessible assets vary.

Reporting is increasingly not optional

Exchanges in many jurisdictions now report customer data to tax authorities, and international frameworks for automatic exchange of crypto account information are being adopted. The assumption that crypto activity is invisible is increasingly wrong, and penalties for non-disclosure are typically far worse than the tax itself.

What to read next

You have finished the Buying & Trading path. The learning hub shows what is next, and the glossary covers any term you are unsure of.