Stablecoins are leading the way for mainstream crypto adoption. In 2025, they hit market cap all time highs, exceeding $230 billion in value.

By April 2025, stablecoins showed 19 consecutive months of growth. A demonstration of unstoppable adoption that takes a different trajectory than other, more volatile cryptocurrencies.

Once you scratch the surface of stablecoins, it's easy to understand this growth. They serve as a bridge between traditional finance and digital assets.

We've spoken previously about how stablecoins are becoming a leading payment method for cross border transactions. They enjoy all the benefits of cryptocurrency while retaining the steadier asset value of traditional fiat currency.

If you're using stablecoins for your business, work and investments, then be careful… because there are some very specific stablecoin taxation events to record. While they represent a digital dollar in many ways, they are treated as digital assets. So every time you send, receive and trade, there are stablecoin tax implications.

What counts as a stablecoin?

Before we get right into the heart of stablecoin taxation, we should start with what cryptocurrencies make up the stablecoin market. 

USDT is the leading stablecoin. It's the third biggest cryptocurrency behind only Bitcoin and Ethereum. It's pegged one to one to the US dollar, meaning its value is always worth one dollar. Such is its popularity that it boasts a market cap of over $140 billion and is growing fast.

USDC is the biggest competitor to USDT. It makes up roughly 25 to 30% of the stablecoin market with a $60+ billion market cap. Again, it's pegged to the US dollar and is used across multiple blockchains such as Ethereum and Solana.

DAI is backed by cryptocurrency collateral. The price is maintained through smart contracts and managed by a decentralized governance system called MakerDAO. It represents an algorithmic approach to maintaining asset stability.

Other versions of stablecoins have also been created, including newcomers like PayPal USD and BUSD, although none have challenged the market share of the top two.

These USD pegged stablecoins account for 99.8% of the market and, astonishingly, now represent nearly 1% of the total US M2 money supply. Adding to this, in 2024, more than $24 trillion in value was transacted in stablecoins, a significant number that outstrips the combined annual volumes of Visa and Mastercard. 

With such high volumes of financial transactions, governments are paying ever closer attention to the regulation and taxation reporting on this activity. This brings us to the key area of how these digital assets are fundamentally taxed.

Tax fundamentals for stablecoins

It's important to stress that the taxation rules on stablecoins differ in every country.

In this article, we will try to discuss the broad view of the market, but quite often we will refer to the US frameworks. So wherever you're located and making payments, make sure to check your own stablecoin taxation rules closely.

Property not currency

They might have the same value as fiat currency, but stablecoins are taxed differently. 

The IRS, for example, views stablecoins as taxable property like other cryptocurrencies. This means every time you trade, pay with or sell your coins, it triggers a capital gain or loss event.

Generally, most countries treat cryptocurrencies as capital assets, meaning they are subject to a capital gains tax. The intricacies of this can also extend into income tax in certain circumstances, more on this shortly!

It's an interesting juxtaposition compared to traditional cash. It results in a disconnect between how people use these stablecoins (almost as digital cash) and how they must report them (more like stocks and shares), unless it is received as payment for goods or services.

To give you a real life example, if you were to buy a coffee with USDC, this would technically be treated as a property disposal and require you to report a capital gain calculation. Obviously, this level of tax complexity doesn't extend to fiat payment methods.

Global stablecoin taxation regulation moving forward

Governments have identified this as a potential issue with the taxation method of stablecoins. Although they are generally not regarded as legal tender or ‘real’ money, in most countries, governments are looking at ways to remove complexities from their current reporting systems.

For example, in February 2025, there were three bills introduced into Congress that aim to establish a regulatory framework specifically for payment stablecoins. This shows the potential for change in how they are classified and taxed in the future.

The current fragmented regulation is complex for people to use. Such huge growth in the use of stablecoins currently puts taxpayers and businesses under a huge burden. It may even lead to the taxable events being reported differently to various authorities.

What are the stablecoin taxable events to watch out for?

1. Buying stablecoins with fiat currency

The act of purchasing stablecoin or any cryptocurrency with a fiat currency like US dollars or Euros is treated the same as buying any other property. It’s the same as buying stocks and shares. There's no tax to pay at this point, but a clear record must be kept because it establishes your cost basis for future trades and disposals.

When it comes to stablecoins, it will often be one dollar per coin plus any transaction fees you incur along the way.

2. Purchasing with other crypto

If you buy stablecoins with other cryptocurrencies, this triggers a taxable event. Let's say you buy USDC with Solana. This action means you need to calculate your capital gain or loss on the cryptocurrency you're selling or ‘disposing’ of. The calculation needs to be done on a cost basis (the price you acquired the Solana) and the eventual price you sold it for USDC to establish how much value you lost or gained on the transaction.

3. Receiving as payments

If you're receiving stablecoins or any cryptocurrency as ordinary income, like you would receive a salary or payment for freelance work, this is generally treated in a similar way to receiving normal fiat money for your services or your time.

So, for individuals such as freelancers, it would fall under their income tax and for businesses, it needs to be reported as receipt of revenue.

Another important factor here is recording the cost basis of when you receive this stablecoin or cryptocurrency. Any change in capital value of your cryptocurrencies before disposal would be treated as a capital gain or a loss on top of your income tax requirements. This is a dual tax situation that many people aren't prepared for.

It's worth noting that even stablecoins can generate small gains and losses as there can be slight price fluctuations away from their one dollar peg and even in dramatic circumstances, they can seriously depeg and affect asset values.

4. Converting back to fiat

When you convert your cryptocurrency and stablecoins back to fiat currency (e.g. you trade USDC for US dollars), this is a taxable event that requires the calculation of the gain or loss you've had. As most top stablecoins retain a one to one US dollar peg, there is unlikely to be any capital gain or loss in the outcome of your calculations, but detailed financial records need to be kept in case tax audits are carried out.

5. Stablecoin to stablecoin transactions

Similar to trading USDC for US dollars, making stablecoin to stablecoin transactions triggers another taxable event. So if you were to trade your USDC to USDT, this needs to be recorded and capital gain calculations must be checked.

Of course, both assets target the same one dollar value, so there's unlikely to be any tax to pay on these transactions, but once again, it's important to keep detailed records in case tax authorities scrutinize any transactions you're making, particularly as they tighten rules on issues like wash trading and tax avoidance schemes.

6. Other forms and DeFi activities

One of the big uses of stablecoins is within the DeFi (decentralized finance) landscape. Because of their stable value, many people use them either as a trading pair for other cryptocurrencies or to unlock extra income from their cryptocurrency.

For example, staking rewards. Staking is where you lock a cryptocurrency to a blockchain and receive rewards for being a participant in the network. It's a little bit like earning interest on a bank account. Now, this interest is often classed as income and can be classed as income tax or a capital gain. So that's the first taxable event that can happen here.

But further to this, on receiving any income from DeFi protocols like staking, yield farming and mining, you need to record the cost basis for the value of the coin when it enters your possession in case of future disposals.

Calculating tax liability for stablecoins

So now you know when a taxable event takes place. The next step is understanding how you're going to calculate stablecoin taxation.

FIFO (first in, first out)

FIFO is a commonly used and IRS accepted method for calculating capital gains. It relies on taking the price of the first asset or stablecoin purchased and using that for the first ones sold. It's a chronological matching system if you are making multiple buys and sells over a period of time.

LIFO (last in, first out)

LIFO is less common but may be allowed if it is used consistently across all of your crypto assets. It simply assumes that the most recently acquired coins are the ones to be sold first.

Specific identification

This is probably the most tax advantageous but requires detailed recording to spot exactly which stablecoins were used in each transaction. It's hard to implement with cryptocurrency as assets can end up mixed in a single wallet as a pooled value, so it becomes impossible to distinguish one stablecoin from another. 

Recording your stablecoin tax liability

It's important to note that whatever method you choose should be accepted in your jurisdiction and applied consistently across all your tax years.

To back up your tax reporting method, you should keep detailed transaction confirmations showing the date, the time, the amounts, the dollar values and the fiat values for every acquisition and disposal. 

Specialist payment and tax reporting software is recommended. Without keeping this proper documentation, it becomes impossible to prove your transactions during audits, leaving you in an unfavorable position with the authorities.

Simplify stablecoin taxes with Acctual

Stablecoins are the future. They act as the digital dollar providing an instantaneous way to transfer value anywhere across the globe without the need for banks and payment processors.

But as we've seen, that comes with all sorts of tax implications. 

Every time you buy, sell or pay with stablecoin, it creates a taxable event. This requires detailed record keeping.

If you're looking to track and manage your stablecoin payments effectively, then Acctual is the best place to do this. 

In fact, it doesn't just help with your tax reporting, it even allows you to create and track invoices for your stablecoin payments.

So you could invoice clients or pay bills using USDC or USDT, with integration with fiat currency for ultimate flexibility. 

If you prefer working in stablecoins but your client prefers to pay in fiat currency, that's no problem… You can invoice the client in US dollars and get paid into your USDC wallet. Or vice versa. Acctual takes care of everything in between.

Plus, to make tax season painless, everything integrates with your accounting and ERP software. No more manual data entry or frustrating errors. 

With Acctual, identifying stablecoin taxable events is straightforward. You'll get organized payment records that make it easy to provide accurate information to the tax authorities, all with complete business transparency for your stablecoin payment operations.

Get started in two minutes with a free account today.

FAQs for stablecoin taxes

Is USDC taxable?

Yes, USDC is taxable. It is generally treated as a property asset rather than a currency. This means the disposal or sale of an asset like USDC is subject to capital gain tax regulation. It could also fall under income tax if you receive it as payment for goods or services.

Is converting crypto to USDC taxable?

Yes. When you switch any cryptocurrency into a stablecoin like USDC, this is a taxable event. So every time you make a trade from something like Bitcoin or Ethereum to USDC on an exchange, you've triggered a taxable event, which must be recorded

Is USDT taxable?

Yes, USDT is taxable every time you use it to trade or dispose of it. Or if you receive it as a form of income for goods or services, you might need to report it as income tax.

Is converting USDC to USD taxable?

Yes, converting USDC to US dollars is a taxable event. Although as USDC tries to maintain a $1 value, there is unlikely to be any direct taxes to pay on this transaction. However, you should keep detailed records in case of any tax audits.

Is converting BTC to USDC a taxable event?

Yes, converting Bitcoin into USDC is a taxable event. You need to calculate the capital gain from the cost basis when you acquired the Bitcoin until the point you traded it for USDC.