Key Takeaways
- Crypto has evolved into a multi-trillion-dollar industry, but outdated tax rules treat it like a speculative asset from 2014.
- Every crypto transaction, even small payments, is still a taxable capital gains event in many countries.
- Without modernized tax frameworks, crypto’s potential as a payment and innovation tool will remain stifled.
Crypto has changed significantly over the past decade, but the industry’s tax rules are still stuck in the Stone Age.
What was once a niche experiment for cypherpunks and libertarians has evolved into a multi-trillion-dollar asset class.
Crypto is drawing significant institutional interest, while Bitcoin (BTC) exchange-traded funds (ETFs) in the U.S. have pulled in nearly $40 billion since January 2024.
Tax Rules for Crypto
Approximately 134 countries are exploring central bank digital currencies (CBDC).
Despite all the progress, many jurisdictions still treat crypto as property, regardless of how it’s used. This means every transaction is a taxable event subject to capital gains tax.
This approach made some sense in 2014, when Bitcoin was, at best, a speculative asset. But in 2025? Not really.
Unfortunately, the tax rules in many jurisdictions still don’t distinguish between how crypto is treated as a form of spending and investing.
The Problem With Treating Crypto as Property
In many countries, such as the U.S., Australia and Canada, current tax laws mean that spending, swapping, and selling trigger a capital gains taxable event.
Buying lunch with Bitcoin? That’s a capital gains event. Using Ethereum (ETH) to purchase a beer? Capital gains event.
It completely contradicts the way crypto was designed to function.
Meanwhile, in decentralized finance (DeFi), users move assets around fluidly — staking, lending, providing liquidity, and trading multiple times per day.
Ironically, the IRS almost tried to turn back the clock and treat DeFi platforms like traditional brokers, even though these platforms are not built that way at all.
Luckily, the U.S. Congress voted against it in March, and it’s widely expected that U.S. President Donald Trump will back the decision.
Outdated Tax Rules and Hidden Costs
Beyond the administrative headaches, the current tax structure actively holds crypto’s potential back.
Crypto has the power to be more than just an asset class, but that won’t happen if the tax system continues treating it as nothing more than a stock alternative.
Stablecoins have become a popular way to send money and make payments. While they’re designed to maintain a stable value, unlike Bitcoin or Ethereum, many jurisdictions still tax them as capital gains when you trade or spend them.
Imagine being paid in stablecoins as a remote worker, only to have your accountant later inform you that your earnings could also trigger a capital gains tax event when you convert them back into your local currency.
Tax Frameworks of the Future
Regulators don’t have to look far for solutions. One simple fix for jurisdictions with strict tax rules could be to classify different types of crypto activity separately.
For instance, stablecoins shouldn’t be taxed the same way as speculative crypto investments if they’re being used solely as a medium of exchange.
The intended use of crypto should determine whether it triggers a capital gains tax event.
Tax frameworks shouldn’t be the enemy of crypto. If regulators truly want to support blockchain innovation, they’ll need to consider updating these rules.
Otherwise, crypto will remain trapped in a paradox, expanding into an even bigger ecosystem while being taxed like it’s still 2014.
The views, thoughts, and opinions expressed in the article belong solely to the author, and not necessarily to CCN, its management, employees, or affiliates. This content is for informational purposes only and should not be considered professional advice.
About the Author
Robin Singh is the founder and CEO of crypto tax platform Koinly, a crypto tax solution that assists investors in generating crypto tax reports. He has a background in finance and accounting and worked as a lead engineer at a Fortune 100 company in the U.K. before founding Koinly.
