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Why Stablecoin Values Differ from Fiat in Crypto Tax Calculations
Why Stablecoin Values Differ from Fiat in Crypto Tax Calculations
Layla Huang avatar
Written by Layla Huang
Updated over a week ago

Although stablecoins are theoretically equivalent in value to fiat currencies, we do not consider them always equal to $1 in Crypto Tax Calculator calculations for various reasons.

1. Stablecoins Are Cryptocurrency, Not Fiat

Stablecoins are cryptocurrencies pegged to the value of fiat currencies, aiming to maintain a stable value. However, they are still classified as cryptocurrencies, not fiat currencies. This distinction is critical for tax purposes because the IRS, ATO, and many other tax authorities treat cryptocurrencies as assets/property. This classification means that most transactions involving the disposal of stablecoins can potentially trigger a taxable event, typically a capital gain or loss.

2. Stablecoin De-peg Events

There have been a few events in crypto history in which the 'stablecoin' lost its peg with the US dollar.

One example is the TerraUSD (was UST, now USTC) incident, where the algorithmic stablecoin dramatically lost its peg to the US Dollar, dropped more than 90% in two weeks, and never recovered (so far). De-pegging also happened to the widely used and well-trusted stablecoins - USDT and USDC. Although it only de-pegged for a very short time, these incidents highlight the volatility risk inherent in stablecoins. Many degens were catching the falling knife and trying to get a discount for the stablecoins during these incidents, indicating these events can lead to significant capital gains or losses.

3. Stablecoin Pools

An example is Curve Finance's stablecoin pools. These pools allow for the trading of one stablecoin for another, aiming to minimize slippage and maintain stability. However, when the balances of stablecoins within a pool become uneven, withdrawing a stablecoin can result in receiving an amount that does not precisely equal USD $1.


You deposit 100 USDC into a Curve pool and get 100 2CRV tokens in return. Later, you deposit your 100 2CRV tokens and want to withdraw 100 USDT instead. At the time of withdrawal, if the pool's balance favored USDC (e.g., 30% USDT: 70% USDC), you might only be able to withdraw 95 USDC by depositing 100 2CRV tokens. This discrepancy causes capital gains as, now, your USDC cost base is higher than the USDT you deposited, and the USDC: USDT is not 1:1.

You can check the transactions in one of the stablecoin pools here.

4. Slippage Impact

Slippage in the context of stablecoins refers to the difference between the expected price of a trade and the price at which it is executed. In volatile market conditions, even stablecoins can experience slippage. This affects the amount of currency received in a transaction.

While stablecoins aim to mirror the value of the fiat currencies (majority US Dollars), they are still classified as cryptocurrencies. At this stage, Crypto Tax Calculator does not have a plan to treat all stablecoins as USD $1 at all times. Instead, CTC treats these assets with market prices or the value of the corresponding transaction (see the example image below).

If you need clarification, please reach out to our support team for how to utilize the platform or consult a local tax professional for advice tailored to your individual situation.

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