How is cryptocurrency taxed in the U.S.?

The IRS treats cryptocurrency as property, not currency, so the rules mirror stocks. Every time you sell, trade one coin for another, or spend crypto on goods, it's a taxable event – you owe capital gains tax on the difference between what you paid and the value at disposal. Hold longer than a year for the lower long-term rates; one year or less means short-term rates equal to your income bracket. Even swapping Bitcoin for Ethereum is taxable, and so is buying a coffee with crypto. Mining, staking rewards, and airdrops are taxed as ordinary income at their value when received, then again as capital gains when you later sell. Crucially, the wash-sale rule does not currently apply to crypto, so you can harvest losses and rebuy immediately. Keep meticulous records of every transaction's date, cost, and value.