How It's Treated When Taxable
Trading crypto to crypto may be taxable in many countries, including Australia, the US, the UK, and Canada. When you exchange one cryptocurrency for another, it's considered a disposal of a Capital Gains Tax (CGT) asset. Although it is a 'trade' of two crypto assets, it is treated from a tax perspective as a 'sell' and a 'buy'. Please see the interpretation in the table below:
❌ Misunderstanding | ✅ Correct tax treatment |
Exchange 10 ETH for 1 BTC | Sell 10 ETH for $30,000 Buy 1 BTC for $30,000 (Grouped as a 'Trade' in CTC.) |
I've never sold my crypto back to fiat or taken them out of the exchanges so I do not need to pay taxes. | I sold 10 ETH for $30,000. There is a CGT that needs to be calculated for selling ETH. I then bought 1 BTC for $30,000, and this amount serves as the cost base for the 1 BTC. |
This triggers a CGT event, where you must calculate any capital gain or loss based on the market value of the cryptocurrencies involved at the time of the transaction. It’s essential to keep detailed records of each transaction to accurately report any gains or losses during tax time.
For more detailed information, you can visit the tax offices' official pages:
Non-taxable in Some Countries
In some countries, crypto-to-crypto trades are not subject to capital gains tax. If this applies to your situation, you can enable the 'Treat crypto-to-crypto trades as non-taxable disposals' option in your Settings -> Tax."
The taxability of crypto-to-crypto trades varies widely, so it's crucial to understand the specific regulations in your jurisdiction. Consulting a local tax professional is highly advisable to ensure compliance and optimal tax handling of your cryptocurrency transactions.