Almost every crypto move is a taxable event in the US, UK, EU, and most of the developed world. Getting tracking right from year one saves you from a five-figure accountant bill in year four.
What counts as a taxable event
- Selling crypto for fiat — capital gain or loss on the difference between cost basis and sale price.
- Swapping one token for another — yes, this is a sale. ETH → USDC is taxed.
- Spending crypto — buying anything with BTC triggers a disposal at fair market value.
- Receiving staking, lending, or airdrop rewards — ordinary income at the time of receipt.
- Earning NFT royalties — usually self-employment income.
What is NOT taxable
- Buying crypto with fiat and holding it.
- Moving crypto between wallets you own.
- Holding through a price increase without selling.
- Gifting under the annual exclusion limit (varies by country).
The records you need
For every transaction: date, time, asset, amount, fiat value at the time, fees, the wallet/exchange involved, and the type (buy, sell, swap, transfer, income). Most tax software pulls this from exchange APIs and on-chain data, but you should keep a parallel CSV backup.
Tools that do this for you
In 2026, Koinly, CoinTracker, Accointing, and CoinLedger dominate. They connect to exchange APIs, scan your wallet addresses, and produce country-specific tax forms (Form 8949 in the US, SA108 in the UK, etc.). Expect to pay $50–$300/year, depending on transaction count.
Common beginner mistakes
- Forgetting that DeFi LP positions are usually disposals when you enter and exit.
- Treating airdrops as untaxed because the cost was zero.
- Not separating wallets — mixing personal and trading wallets makes basis tracking a nightmare.
- Waiting until April. Run your tax software quarterly; tax errors compound.
Once you understand the basics, level up with our crypto tax software comparison and our tax-loss harvesting guide.
