Crypto Taxes: How Trading Gains, Staking Rewards and Airdrops Are Typically Treated

The two questions behind every crypto tax issue

Moving coins between wallets you own is not a disposal. Canada's CRA and the UK's HMRC both say so explicitly.

1. Was there a disposal? Selling, swapping or spending crypto usually triggers a gain or loss, measured against what the asset cost you.
2. Was there income? Receiving tokens for staking, mining or services is often taxed as income at the value on the day you receive them. When you later dispose of those tokens, the gain or loss is measured from that value.

What counts as a disposal

Notes. The IRS treats digital assets as property and applies the general property rules, with gain or loss recognised on a sale or exchange. Its Form 1099-DA page describes covered transactions as disposing of, selling, exchanging or transferring digital assets for other digital assets, currency or goods and services. The UK, Canada and Australia list swaps and spending as disposals on their own guidance pages.

How gains are taxed

United States. Digital assets are property. If you held them one year or less before selling or exchanging, the gain or loss is short-term, and if you held them more than one year it is long-term. According to the IRS, net short-term gains are taxed as ordinary income. For long-term gains, the IRS lists rates of 0%, 15% and 20%. For tax year 2025, the 0% rate applies up to taxable income of $48,350 for single filers and $96,700 for married couples filing jointly, and the 15% rate applies up to $533,400 for single filers. The 20% rate applies above that. Check the current year's thresholds.

Brokers report sales on Form 1099-DA. The IRS says that for 2025 the filing requirements generally apply to US brokers, and that you may not receive a form from a foreign broker. It also says that whether or not you receive the form, you must report all income, gains and losses from digital asset transactions.

United Kingdom. HMRC pools tokens of the same type. Disposals are matched first against acquisitions on the same day, then against acquisitions within the following 30 days, and the rest against the section 104 pool. GOV.UK shows Capital Gains Tax at 18% on gains within the basic-rate band and 24% above it, from 6 April 2026, with a £3,000 annual tax-free allowance for 2026 to 2027\.

Canada. The CRA says a crypto transaction is either business income or a capital gain depending on whether your activity is consistent with carrying on a business. Indicators include frequency of trading, short holding periods and time commitment. For capital gains, you include half of your gains in income.

Australia. The ATO treats the sale, gift, swap, conversion and spending of a crypto asset as CGT events. You make a capital gain if the proceeds are more than the cost base. For individuals who are Australian residents and have owned the asset for at least 12 months before the CGT event, the capital gain is reduced by 50%. The ATO also says each crypto asset is a separate CGT asset, so you need records for each.

A worked example

Hypothetical figures, ignoring fees. You buy 1 ETH for $2,000.

Staking in the same year. You also receive 0.05 ETH as a staking reward when ETH is $3,000. That is $150 of income on the day you gain control of it. The tokens now have a $150 basis. If you sell them later at $3,600, the proceeds are $180, and the gain is $30.

UK pooling. You buy 1 BTC for £30,000 and another for £50,000, so the pool holds 2 BTC at a cost of £80,000, an average of £40,000 each. You sell 0.5 BTC for £60,000 a coin, so £30,000 of proceeds. The allowable cost is 0.5 × £40,000 \= £20,000, and the gain is £10,000. After the £3,000 allowance, £7,000 is taxable. At 24% that is £1,680, and at 18% it would be £1,260. Which rate applies depends on your income and the size of the gain.

• Sale after 14 months at $3,600. In the US, this is a long-term gain of $1,600. In Canada, half of a gain is taxable, so a $1,600 gain would add $800 to income. In Australia, the 50% discount would also reduce a $1,600 gain to $800 for an eligible resident. In both cases the rate you pay on that amount depends on your other income.
• Sale after 6 months at $3,600. In the US, this is a short-term gain of $1,600, taxed as ordinary income.

Staking rewards

An important point from the US ruling is the timing. In the ruling's example, the rewards became income when transfer restrictions lifted, not when validation happened.

Airdrops

• US. The IRS FAQ says that when you receive digital assets following a hard fork, you have ordinary income equal to their fair market value when received, once you have dominion and control. The basis is the amount you included in income.
• UK. HMRC says Income Tax does not apply to airdrops received personally if you did nothing in return and it is not part of a trade or business. It does apply when the airdrop is in return for, or in expectation of, a service. Later disposal can create a CGT gain either way.
• Australia. The ATO says an airdrop received in return for goods or services is ordinary income at market value, and that value is the first element of the cost base. An airdrop received through a hobby or entertainment does not need to be included in assessable income.
• Canada. The CRA page we reviewed does not address airdrops, so check current CRA guidance for your case.

Practical steps

This article is general information, not tax advice. The examples use hypothetical figures.

1. Keep a record of every transaction: date, token, quantity, value in your local currency and fees. The ATO, for example, expects records for each crypto asset and each transaction.
2. Track cost per asset or pool, following your country's method (separate assets in Australia, pooling in the UK).
3. Record the value on the day you receive any reward, not on the day you sell it.
4. Do not rely on an exchange form alone. The IRS states that foreign brokers may not send a Form 1099-DA, and you must report either way.
5. Check the holding period before a sale. The one-year line in the US and the 12-month line in Australia can change the tax on the same gain.
6. Ask a tax adviser about edge cases: DeFi lending, wrapped tokens, NFTs, business activity and moving between countries.