CGT on Crypto: What You Need to Know About Capital Gains Tax on Digital Assets

When you sell, trade, or spend crypto, digital assets like Bitcoin or Ethereum that can be bought, sold, or exchanged for goods and services. Also known as cryptocurrency, it is treated as property by tax agencies like the IRS and HMRC—not as currency. That means every time you trade one coin for another, sell for fiat, or use it to buy coffee, you may trigger a capital gains tax (CGT), a tax on profit made from selling an asset that has increased in value. This is not optional—it’s enforced globally, and ignoring it can lead to penalties, audits, or even legal action.

CGT on crypto isn’t just about selling Bitcoin for dollars. It applies to crypto-to-crypto trades, exchanging one digital asset for another, like swapping ETH for SOL. Even if you don’t touch fiat, the IRS and other agencies see this as a taxable event. Your cost basis—the price you paid for the original asset—is tracked, and any gain above that is taxed. If you bought 0.1 BTC for $3,000 and later traded it for 500 SOL worth $5,000, you just triggered a $2,000 capital gain. You don’t need to cash out to owe tax—you just need to move the asset. Many people get tripped up by liquidity mining, earning rewards by locking crypto in DeFi pools. Those rewards are taxed as income when you receive them, and if you later sell them, you pay CGT again. It’s double taxation, and it’s real. The same goes for staking rewards, airdrops, and even NFT sales. There’s no loophole here. Countries like the U.S., UK, Canada, and Australia all have clear rules. The EU’s MiCA regulation is starting to standardize reporting too. You can’t rely on exchanges to report everything—many don’t track your full history, especially across wallets or chains. That’s why tools like Koinly or CoinTracker exist: they help you calculate gains across dozens of transactions.

Some think holding crypto for a year makes it tax-free. Not true everywhere. In the U.S., long-term rates are lower, but you still owe tax. In the UK, you get an annual allowance (£3,000 in 2025), but anything above that is taxed. In Australia, there’s no holding period exemption—you pay CGT regardless. And if you’re a U.S. person with over $10,000 in foreign crypto accounts? You might also need to file an FBAR. The rules are messy, but they’re not optional. The post collection below dives into real-world examples: how SushiSwap trades trigger CGT, why TORSY and DADDY meme coins still count as taxable assets, and how Iran’s mining rules affect what miners report. You’ll find clear breakdowns of how DeFi, exchanges, and even airdrops fit into your tax picture. No fluff. No theory. Just what you need to know before you trade again.