What crypto transactions are taxable?

A taxable event occurs when you: 

  • Sell crypto for fiat

  • Trade crypto for crypto

  • Spend crypto on goods and/or services

  • Receive crypto as income, i.e. through mining or airdrops, selling goods and/or services for crypto, or receiving crypto as salary

Buying crypto with fiat (i.e. USD) is not a taxable event. Transferring crypto between wallets and exchanges is not taxable either. So if you buy 5 BTC on Coinbase and transfer it to a hardware wallet where you do not touch it, there are no taxable events.

For example, if you buy 1 BTC on Coinbase at $3000, you owe no taxes. 

A month later, the 1 BTC you are holding rises to $4000, and you trade the 1 BTC for 20 ETH. You now realize that $1000 gain in a taxable event.

If that 20 ETH drops to $3000 in value and you sell it for USD, you realize that $1000 loss in another taxable event.

It is important to keep in mind that crypto to crypto trades realize gains or losses. If you traded crypto for crypto at the height of the bull run in 2017, you likely realized large profits — but if you continued to hold through 2018, you would have lost portfolio value while still being liable for tax on the previous tax year's gain!

Consider using our Portfolio and Tax Loss Harvesting Dashboard in order to track the tax liability of trades before you make them!

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