Cryptocurrency Taxation and DeFi

Cryptocurrency Taxation in Detail

1. Taxable Events

• Selling Cryptocurrency for Fiat: If you sell cryptocurrencies like Bitcoin for a government-issued currency (e.g., US dollars, Euros), you need to calculate and report any capital gain or loss on the transaction. The gain or loss is the difference between what you paid for the cryptocurrency (your cost basis) and what you sold it for.

• Using Cryptocurrency for Goods and Services: When you use cryptocurrency to purchase goods or services, each transaction may lead to a capital gain or loss, depending on the price of the cryptocurrency when you acquired it versus when it was spent.