How are Stablecoins Taxed?

Stablecoins, like DAI, USDC, and USDT, are typically pegged to a fiat currency like the U.S. dollar. Here's how cryptocurrency tax works for these assets.

Zac McClure
ByZac McClure, MBAUpdated on May 3, 2022 · minute read

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Key Takeaways

  • Stablecoins are taxed as property, just like other crypto.

Stablecoins are cryptocurrencies like DAI, USDT (Tether), and USDC that are pegged to a fiat currency like USD. Even though stablecoins often equal the value of the U.S. dollar, they are still treated as property by the IRS because they are cryptocurrency assets.

That means that sales or exchanges of stablecoins must be reported on on your crypto taxes — even if you had no gain or loss.

Will you pay taxes on stablecoins?

For the most part: no.

However, there are instances where you can have a capital gain or loss as a stablecoin's price can fluctuate slightly. If you are trading large amounts of stablecoins, these slight fluctuations can result in a tangible capital gain or loss.

For example:

  • The price of DAI is $1. You buy 50,000 DAI for $50,000 USD.

  • Later, you sell your DAI when the price of DAI is $1.02. Thus, you sell 50,000 DAI for $51,000 USD. You will have a capital gain of $1,000, and these capital gains are taxed.

Such taxation only occurs in the somewhat unusual event that a stablecoin fluctuates in value, and the capital gains are only significant when you are trading large volumes of stablecoins. Keep in mind that you need to report these capital gains (or losses) no matter how small they are.

For more info on crypto tax basics, visit our Crypto Tax Guide.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

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Zac McClure
Zac McClureCo-Founder at TokenTax
Zac co-founded TokenTax after his career in international finance and accounting at JPMorgan, Imprint Capital and Bain. He has worked in more than half-dozen countries and received his MBA from the UPenn Wharton School.

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