Last Updated on April 5, 2025 by Patrick Camuso, CPA
Digital assets, including cryptocurrencies, stablecoins, and NFTs, are considered property for U.S. tax purposes. This means every transaction can have stablecoin taxes implications, and the fair market value in U.S. dollars is used to determine the tax impact. The IRS treats crypto assets like Bitcoin and Ethereum the same way under these rules.
Tax professionals must understand the tax treatment of these transactions to provide accurate guidance. Digital assets can be bought, sold, owned, transferred, or traded, and failing to report these activities accurately can result in penalties and audits, as well as serious consequences such as criminal investigations for tax evasion.
Understanding crypto taxation is essential, as regulatory updates and compliance requirements continue to evolve for digital assets.
Patrick Camuso, CPA: “Even assets designed to be ‘stable’ in value still create taxable events when sold, exchanged, or used in a transaction.”
Compliance Note: IRS Notice 2014-21 confirms digital assets are property, not currency.
This marks a new era of digital asset regulation and compliance.
Understanding Stablecoins
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to fiat currencies, such as the U.S. dollar. They serve as digital currencies used for everyday transactions. Popular examples include USDC, USDT, DAI, and other stablecoins.
Key Tax Points:
- Using stablecoins to make a purchase is a disposal event subject to capital gains tax.
- Receiving stablecoins as payment for goods or services is taxed as ordinary income.
- Transferring stablecoins between your own wallets is not a taxable event.
For example, if you convert Bitcoin to USDC or other stablecoins, this is a taxable event and you may incur capital gains or losses.
Earning interest or staking rewards from stablecoins is also taxable, and such rewards may be classified as miscellaneous income.
Although their value may be stable, tax rules treat stablecoins like other digital assets.
Tax Implications of Digital Asset Transactions
Transactions involving stablecoins are a type of cryptocurrency transactions that can trigger capital gains or losses depending on the cost basis (generally the purchase price in USD) and the disposal value.
- Disposals include sales, swaps, or spending stablecoins, and can result in a capital gain.
- Capital gains from stablecoins are reported on Form 8949.
- Your holding period determines if gains are short-term or long term capital gains (for assets held more than one year).
These same principles apply to NFT taxes, crypto taxes, and bitcoin taxes.
Maintaining detailed transaction records is critical for accurate reporting. It is also important to report losses accurately to offset gains and reduce your tax liability.
Be sure to meet all IRS reporting requirements for digital asset transactions to remain compliant.
Stablecoin Taxes Overview
Taxes on crypto, including stablecoins and NFTs, can be complex. Key factors include:
- Whether income is ordinary (like wages) or capital gains.
- Which IRS forms apply (Form 8949, Schedule D, and for income, Schedule 1 or Schedule C). Form 1099-DA is part of a broader set of other forms used for tax reporting, each designed for different types of income and transactions.
Many cryptocurrency exchanges already report certain information to the IRS. Beginning in January 2026, under the IRS new tax rule digital income, cryptocurrency brokers, including cryptocurrency exchanges and payment processors, will send Form 1099-DA to both taxpayers and the IRS for transactions conducted during the 2025 tax year. Decentralized exchanges will also be classified as brokers and required to report digital asset transactions to the IRS, further facilitating tax tracking and compliance. This form must be incorporated into your annual tax filing starting in 2026.
Brokers are responsible for providing tax forms like the 1099-DA, ensuring regulatory obligations and transparency in cryptocurrency transactions. Reporting of sales, exchanges, or disposals of digital assets to customers is typically done on tax forms like Schedule C.
The IRS aims to enhance transparency and compliance in the cryptocurrency market through these changes, marking a significant step forward in digital asset regulation. Additionally, entities authorized to issue payment stablecoins under regulatory frameworks, such as the GENIUS Act, play a key role in the stablecoin ecosystem.
Stablecoin Taxes: Capital Gains Tax Considerations
Capital gains tax applies when stablecoins are sold, swapped, or used in a transaction. An exchange of stablecoins for another cryptocurrency or asset is also a taxable event. The rate depends on:
- Short-term gains: Held for one year or less, taxed at ordinary income rates, typically ranging from 10% to 37% depending on your income.
- Long-term gains: Held for more than one year, taxed at favorable rates, usually 0%, 15%, or 20% based on your income level.
Any investor should understand these capital gains rules, as gains from sales or exchanges must be reported on your tax return.
CPA Team Insight: “Converting Bitcoin to USDC is a taxable event, even if the dollar value feels equal.”
Compliance Note: Gains are calculated using the difference between your basis and the disposal value. Your basis is generally the cost in USD. Proceeds paid from sales or exchanges are subject to tax.
Stablecoin Taxes: Income Tax Implications
Income resembling wages that is received in stablecoins should be taxed at ordinary income rates. Examples include:
- Payments for goods or services, including those received in stablecoins, are taxable.
- Mining rewards.
- Staking income.
Other crypto activities that generate taxable income include trading, selling, and earning rewards from digital assets.
The fair market value at the time of receipt determines the taxable amount.
Maintaining an account with crypto tax software can help you track all digital asset income efficiently.
Compliance Note: All digital asset income must be reported, regardless of amount. Failure to report can lead to penalties and audits.
Keeping a detailed transaction history is essential for accurate tax reporting and compliance.
Converting Crypto and Stable Taxes Compliance
Converting one cryptocurrency to another, including moving into or out of stablecoins, is a taxable event. The fair market value of the asset received must be reported, and the original cost basis maintained.
Transferring crypto between your personal accounts is generally not a taxable event, but it’s important to keep accurate records for tax purposes. Similarly, moving crypto from one wallet to another that you control is not considered a taxable event.
Crypto tax software can simplify tracking and calculating your tax liability.
To stay ahead of regulatory changes and compliance requirements, regularly review updates in the cryptocurrency and stablecoin sectors.
Crypto Transactions and Stablecoin Taxes Reporting
The IRS requires all taxable crypto transactions to be reported on Form 8949 and Schedule D. Required details include:
- Dates and times.
- Amounts.
- USD values at the time of the transaction.
Starting in early 2026, Form 1099-DA will be sent to both the taxpayer and IRS, increasing enforcement of crypto taxes.
Stablecoin Taxes Implications
Stablecoins follow the same rules as other crypto:
- Using them in purchases is a taxable disposal.
- Receiving them as payment is taxable income.
- Wallet-to-wallet transfers are non-taxable.
The IRS treats stablecoins as property, not currency, making accurate reporting critical.
Common Questions About Stablecoin Taxes
Do I have to pay stablecoin taxes?
Yes. Selling, swapping, or spending stablecoins is taxable.
Do you have to report USDC to IRS?
Yes. Report all taxable transactions involving USDC and include them on your tax return.
Is selling BTC to USDT taxable?
Yes. This is a crypto-to-crypto trade and is taxable. For example, if you bought BTC at $10,000 and sold it for USDT when BTC was worth $15,000, you would realize a $5,000 capital gain, which is subject to tax.
Do you have to report crypto under $600 in the USA?
Yes. There is no minimum threshold for reporting taxable crypto transactions.
How much can I make on crypto without paying stablecoin taxes?
Income thresholds may allow a 0% capital gains tax rate, depending on your total income and filing status, but all gains must be reported.
Do I have to report to the IRS when I buy crypto?
Purchases with cash are not taxable but may require disclosure on the IRS digital asset question.
What triggers stablecoin taxes audit?
Unreported income, mismatched records, large transaction volumes, or failing to report crypto activities and losses accurately can trigger an audit.
What is cryptocurrency accounting?
The process of tracking and recording all digital asset transactions, including maintaining a complete transaction history.
What is the accounting method for crypto?
Commonly FIFO, LIFO, or Specific Identification.
How do you record crypto in accounting?
Record the date, amount, USD value, and type of transaction.
What is the 30-day rule for crypto?
Currently, the wash sale rule does not apply to crypto, but legislation may change this.
Which forms are used?
Form 8949 is used to report crypto transactions, along with other forms such as Form 1099 and other forms for different types of income.
Who needs to report?
Any investor involved in buying, selling, or trading crypto must comply with IRS reporting requirements.
About Camuso CPA
Camuso CPA specializes in stablecoin taxes, crypto taxes, and bitcoin taxes for high-net-worth investors, founders, and Web3 organizations. We combine deep IRS expertise with blockchain fluency to deliver compliance-focused, tax-efficient strategies.
📞 Schedule your consultation today to ensure your stablecoin taxes and other digital asset transactions are reported accurately and strategically.
