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How stablecoin transactions impact your taxes

This article applies to US customers only.

Stablecoins are a type of cryptocurrency whose value is tied to another asset, such as a traditional currency like the US dollar (USD) or gold, to maintain a stable price. Their main purpose is to offer an alternative to the price fluctuations of cryptocurrencies like Bitcoin. 

How stablecoins are taxed

Stablecoins, like other cryptocurrencies, are subject to capital gains and income tax even though they’re often tied to a traditional currency like USD. 

Gains or losses from selling or trading stablecoins generally count as taxable, including any transaction fees that affect your taxable income.

Trade a stablecoin for another stablecoin

Stablecoins typically don’t change much in value, but even small fluctuations can result in a profit or loss when trading one stablecoin for another. That’s why it’s important to report these transactions, even if the gains are small.

Trade a stablecoin for other crypto

Trading a stablecoin to another cryptocurrency is treated as a crypto-to-crypto trade, meaning the transaction is taxable.

Capital gains tax only applies if there's a profit. Since stablecoins usually maintain a stable value, many of these trades don’t result in taxable gains. However, if there is a profit, it’s important to report it.

Example: Capital gains from trading USDC for BTC

Suppose you trade 500 USDC for BTC. When you received the 500 USDC, it was worth $500. At the time of the trade, the value rose slightly to $502. That $2 gain counts as a capital gain and may be taxable.
 
Disclaimer: CoinTracker is provided for informational purposes and is not intended as tax, audit, accounting, investment, financial, or legal advice. For financial, tax, or legal advice, please consult your own professional. See our full disclaimer.
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