How crypto is taxed in plain English
Most tax authorities treat crypto as property, not currency. That means many actions are taxable events, including selling for fiat, swapping one coin for another, spending crypto for goods or services, and receiving tokens as income. In the United States, the IRS says anyone with digital-asset transactions must report them and answer the digital-asset question on their return.
Gains and losses are calculated from cost basis and fair-market value at the time of each transaction. The IRS explains how to determine basis, calculate capital gain or loss, and which forms to use; crypto received for goods or services is ordinary income at fair-market value when received.
Global compliance basics: KYC/AML and the Travel Rule
Beyond taxes, most jurisdictions require exchanges and other providers to verify customers and transmit sender/recipient data for covered transfers, known internationally as the Travel Rule. The Financial Action Task Force (FATF) applies payment transparency requirements to virtual assets and VASPs and tracks country-level implementation.
Records you must keep
Keep detailed, contemporaneous records of every transaction: asset type, dates and times, units, fiat value at the moment of the transaction, and fees. The IRS explicitly instructs taxpayers to keep records sufficient to substantiate positions, including fair-market-value measurements in U.S. dollars. Similar record-keeping expectations apply in other countries.
Country-by-country snapshots
United States
Brokers must report certain digital-asset sales on new Form 1099-DA beginning with transactions on or after January 1, 2025; the IRS has also provided transition relief related to information reporting and backup withholding for 2025 transactions. You still must report your taxable activity even if you don’t receive a form. Use Form 8949 and Schedule D for capital transactions, and the appropriate income schedules for mining, staking, or business income.
European Union (MiCA)
The EU’s Markets in Crypto-Assets Regulation (MiCA) entered into force in 2023. Stablecoin issuer rules took effect in mid-2024, with the broader regime for crypto-asset service providers (CASPs) coming into application from late 2024 and transitional windows into 2026 as licensing frameworks finalize. Check ESMA and national regulators for Level 2/3 measures and national transition choices. MiCA is regulatory, not a tax code, but it shapes disclosures and consumer protections around your providers.
United Kingdom
The FCA’s crypto financial-promotions rules require prominent risk warnings, a 24-hour cooling-off period for first-time investors, appropriateness assessments, and strict approval routes for promotions. Separately, HMRC provides updated guidance for individuals on when crypto is subject to Capital Gains Tax or Income Tax, and the UK is implementing the OECD Crypto-Asset Reporting Framework (CARF) from January 1, 2026, which adds reporting duties for UK providers.
Australia
The Australian Taxation Office treats many crypto disposals as CGT events and maintains detailed 2025 guidance on how to work out and report capital gains on crypto, with additional pages covering chain splits and personal-use assets.
Canada
The CRA says profits may be business income or capital gains depending on activity; classification affects how much is taxable. See the CRA’s official crypto guidance for the distinction and reporting.
Singapore
IRAS explains GST treatment for digital payment tokens and applies normal income-tax rules where businesses receive or trade in digital tokens. Individual filing follows Singapore’s normal tax calendar.
India
Since 2022, India taxes profits from virtual digital assets at a flat 30% and applies 1% TDS on many transactions. Recent 2025 materials and press coverage indicate ongoing policy reviews by the Central Board of Direct Taxes regarding the TDS rate and loss-offset rules. Always verify the latest Finance Act or CBDT guidance before filing.
Malaysia
Malaysia’s Securities Commission lists the only registered Digital Asset Exchanges and the approved list of tradeable digital assets and their Shariah status—use these to check if a platform or asset is permitted locally.
How to file: practical steps and forms
Identify each taxable event and categorize it as capital or income. In the U.S., capital disposals belong on Form 8949/Schedule D, while income from forks, staking, or mining belongs on Form 1040 schedules; the IRS page “Digital assets” walks through the workflow. In the UK, use HMRC guidance for individuals and self-assessment deadlines; providers will also have new CARF-based reporting from 2026. In Australia, follow ATO CGT guides and worksheets for crypto. In Canada, determine whether activity is capital or business per CRA guidance and file accordingly.
Common mistakes to avoid
Ignoring reporting because you did not receive a tax form, failing to track basis and fair-market value at the time of each swap, and mixing personal-use and investment activity without records are classic errors. With 1099-DA and other reporting frameworks rolling out, visibility is increasing; keep clean, exportable records from exchanges and wallets.
FAQ
Do I owe tax when swapping one crypto for another?
In many countries, swapping is a taxable disposal. The IRS explains that gain or loss equals the difference between the fair-market value of what you received and your adjusted basis in the asset you exchanged.
What is the Travel Rule and why was my exchange asking for recipient details?
The Travel Rule requires VASPs to collect and transmit originator/beneficiary information for covered transfers to improve payment transparency and combat financial crime.
How long should I keep records?
Follow your local retention rules. As one example, UK regulations implementing CARF require UK reporting crypto-asset service providers to keep specified records for five years; individuals should keep sufficient documentation to substantiate returns.
Does MiCA change my taxes in the EU?
MiCA primarily regulates providers, issuers, and conduct; member-state tax laws still govern how you’re taxed. Check national tax portals alongside ESMA/EBA updates.
