You might be evading crypto taxes and not even know it

A new survey shows most crypto owners don’t understand all the scenarios in which they might owe taxes. And the rules for digital assets are just going to keep changing.

Crypto coin in Uncle Sam hat on an animal trap

The fast emergence of new crypto products and services has left the U.S. government a few steps behind.

Illustration: Christopher T. Fong/Protocol

Almost no crypto investors know all the situations in which their token-trading activities are taxable, a survey conducted by Wakefield Research for tax-prep assistance firm CoinTracker says.

While the Internal Revenue Service issued specific guidance in 2014, and updated it once again in 2019, the fast emergence of new crypto products and services has left the U.S. government a few steps behind. But a large number of crypto investors aren’t even aware of the existing guidelines.

Crypto tax ignorance is widespread, and that’s a problem both for taxpayers and the government. In the survey, when presented with a number of possible situations where crypto could be taxed, 97% of respondents got at least one answer wrong.

  • In fact, there are seven types of taxable crypto transactions: trading crypto for fiat, spending crypto, exchanging one type of crypto for another, earning interest, receiving staking rewards, generating mining income and receiving airdrops.
  • One of the biggest problems spotted by the survey was that most crypto investors didn’t know that trading one type of cryptocurrency for another is a taxable event, likely because they haven’t experienced similar transactions in the non-crypto world.
  • “It’s very rare for a U.S. taxpayer to have dealt with a scenario where they’re trading one equity directly for another — like, no one ever trades Facebook stock directly for Google stock,” CoinTracker co-founder Chandan Lodha told Protocol.
  • Another factor: Taxes get exponentially more complex when a user transacts crypto over multiple exchanges, which is common. The higher the number of exchanges, the more difficult it is to track taxes across the board.
  • It doesn’t help that crypto exchanges don’t typically provide tax forms showing annual capital gains and losses, largely for the above reason. But starting in the 2023 tax year, they’ll have to figure it out.

People think that they know what they’re in for, but chances are they don’t. Despite the obvious gaps the survey revealed, 54% of survey respondents felt confident in their knowledge of crypto taxes.

  • So even though some crypto investors think that they’ve been tax-compliant and think they know how to file, emerging use cases may present obstacles.
  • “The data suggests that it’s not because users are trying to evade taxes, or get around taxes using cryptocurrency,” Lodha said, as 74% of survey respondents said that they wanted more information on how crypto taxes work from the exchanges they use.
  • Instead, it’s more about the complexity inherent in crypto and some key differences from savings and investment scenarios most taxpayers are familiar with. Your bank might have given your grandparents a toaster, but airdropping tokens isn’t covered by the regulations that governed that kind of marketing gimmick.

Washington has a crypto tax agenda. As part of Biden’s 2021 infrastructure bill, IRS crypto reporting requirements in 2023 are going to be easier for crypto investors and harder for crypto firms.

  • Under the new requirements, crypto exchanges, custodians and other services must follow existing broker information reporting rules, which means that they must issue Form 1099-B annually, which details all transactions conducted.
  • Biden is also eyeing crypto taxes as a way to bridge the budget gap in his new budget proposal, which means that there might be clearer rules down the line, as the budget “seeks to modernize rules for reporting on digital assets,” according to Ernst and Young.
  • Some members of Congress have also drafted crypto-friendlier tax bills, such as the Virtual Currency Tax Fairness Act, which would exempt small transactions from being taxed. The tax-fairness proposal has already garnered bipartisan support.

Since crypto is growing, crypto tax advice and compliance are growth fields, too. As a relatively new sector, cryptocurrencies are likely to be met with waves of new regulation and legislation, as the government tries to figure out how — or even whether — digital assets fit into the existing tax system. It’s a good idea to get a handle on what you’re on the hook for now, before it changes once again.


Google is wooing a coalition of civil rights allies. It’s working.

The tech giant is adept at winning friends even when it’s not trying to immediately influence people.

A map display of Washington lines the floor next to the elevators at the Google office in Washington, D.C.

Photo: Andrew Harrer/Bloomberg via Getty Images

As Google has faced intensifying pressure from policymakers in recent years, it’s founded trade associations, hired a roster of former top government officials and sometimes spent more than $20 million annually on federal lobbying.

But the company has also become famous in Washington for nurturing less clearly mercenary ties. It has long funded the work of laissez-faire economists who now defend it against antitrust charges, for instance. It’s making inroads with traditional business associations that once pummeled it on policy, and also supports think tanks and advocacy groups.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Sustainability. It can be a charged word in the context of blockchain and crypto – whether from outsiders with a limited view of the technology or from insiders using it for competitive advantage. But as a CEO in the industry, I don’t think either of those approaches helps us move forward. We should all be able to agree that using less energy to get a task done is a good thing and that there is room for improvement in the amount of energy that is consumed to power different blockchain technologies.

So, what if we put the enormous industry talent and minds that have created and developed blockchain to the task of building in a more energy-efficient manner? Can we not just solve the issues but also set the standard for other industries to develop technology in a future-proof way?

Keep Reading Show less
Denelle Dixon, CEO of SDF

Denelle Dixon is CEO and Executive Director of the Stellar Development Foundation, a non-profit using blockchain to unlock economic potential by making money more fluid, markets more open, and people more empowered. Previously, Dixon served as COO of Mozilla. Leading the business, revenue and policy teams, she fought for Net Neutrality and consumer privacy protections and was responsible for commercial partnerships. Denelle also served as general counsel and legal advisor in private equity and technology.


Everything you need to know about tech layoffs and hiring slowdowns

Will tech companies and startups continue to have layoffs?

It’s not just early-stage startups that are feeling the burn.

Photo: Kirsty O'Connor/PA Images via Getty Images

What goes up must come down.

High-flying startups with record valuations, huge hiring goals and ambitious expansion plans are now announcing hiring slowdowns, freezes and in some cases widespread layoffs. It’s the dot-com bust all over again — this time, without the cute sock puppet and in the midst of a global pandemic we just can’t seem to shake.

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.


Sink into ‘Love, Death & Robots’ and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Our favorite picks for your weekend pleasure.

Image: A24; 11 bit studios; Getty Images

We could all use a bit of a break. This weekend we’re diving into Netflix’s beautifully animated sci-fi “Love, Death & Robots,” losing ourselves in surreal “Men” and loving Zelda-like Moonlighter.

Keep Reading Show less
Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at


This machine would like to interview you for a job

Companies are embracing automated video interviews to filter through floods of job applicants. But interviews with a computer screen raise big ethical questions and might scare off candidates.

Although automated interview companies claim to reduce bias in hiring, the researchers and advocates who study AI bias are these companies’ most frequent critics.

Photo: Johner Images via Getty Images

Applying for a job these days is starting to feel a lot like online dating. Job-seekers send their resume into portal after portal and a silent abyss waits on the other side.

That abyss is silent for a reason and it has little to do with the still-tight job market or the quality of your particular resume. On the other side of the portal, hiring managers watch the hundreds and even thousands of resumes pile up. It’s an infinite mountain of digital profiles, most of them from people completely unqualified. Going through them all would be a virtually fruitless task.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email:, where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Latest Stories