The cryptocurrency market has become more volatile than ever in the last few years. It is worth mentioning that crypto is one of the most volatile non-derivative financial assets. While the popular crypto bitcoin’s value has dropped significantly in the past months, stablecoins have witnessed steady growth in the same time frame.
Stablecoins are booming in the cryptocurrency world with immense market value. It attracts the attention of investors and traders very much. Due to the increased transaction volume, stablecoins taxation has been introduced, similar to crypto taxation. Here, you will learn more about stablecoin taxes.
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Introduction to stablecoin taxes
Stablecoins are taxed similarly to other cryptocurrencies, as said earlier. Although they are pegged to the fiat currency like the USD, they are still witnessed as an asset by tax offices around the world. So, it becomes subject to either capital gains tax or income tax based on your transaction type.
For instance, if you earn stablecoins as an income, you need to pay income tax on your stablecoins. It differs based on where you live. However, in general, you must pay the income tax if you mine stablecoins, earn interest from stablecoins, get paid in stablecoins and receive stablecoins via an airdrop.
If you sell stablecoins for fiat currency, spend on goods/services, swap the stablecoins for another crypto or gift to someone, then you need to pay Capital Gains tax on your stablecoins anytime. It will indeed render you enough insight into the stablecoin taxation.
Is the conversion of crypto to stablecoins a taxable event?
Of course, converting any crypto to stablecoin is a taxable event. It may differ based on where you reside. But, in many cases, you need to pay the Capital Gains tax for converting crypto to stablecoins and vice versa. Remember that any situation in which you make a profit from these transactions will let you pay Capital Gains tax.
It is essential to mention these transactions while filing the tax report, even if you have not obtained any profit or loss. Even though stablecoins fluctuate less, it still fluctuates in price. It is the primary reason for declaring your minimal losses and profits. There are certain tax-free transactions that you do not require to report. Those transactions are buying stablecoins with fiat currency, holding stablecoins and transferring between your wallets.
Get professional assistance for stablecoin taxation!
Even after spending more time and effort, you do not know how to calculate stablecoins taxes. You need professional help to file the stablecoin tax properly to avoid potential troubles. In that situation, you can reach Binocs, a reliable destination to seek all sorts of crypto taxes-related assistance.
Experts will combine your trading history from different exchanges and wallets with minimal error and high accuracy. According to the latest tax regulations, experts help you to perform tax filing quickly and easily.
You have learned in-depth about stablecoin taxes after reading this guide. So, keep these things in mind before investing in stablecoin. You can even get professional assistance to handle the taxation properly.