IRS Reiterates Crypto is Property, Not Currency: Tax Implications Far-Reaching
The IRS has reaffirmed its stance that cryptocurrency is property, not currency. This classification impacts various aspects of crypto use, including mining, spending, selling, swapping, and staking.
The June 2026 US Tax Court ruling in Paschall v. Commissioner aligns with the IRS' position, classifying crypto as property rather than currency. As a result, users are not eligible for foreign currency tax exemptions, but this is only one aspect of the complex tax regime.
Crypto staking rewards and mining payouts are treated as ordinary income under this structure. Users owe income tax on the Fair Market Value (FMV) from the moment they receive crypto tokens in their wallets.
The IRS also treats selling a crypto token, swapping one crypto for another, and spending cryptocurrency as selling property to fund a purchase. These transactions attract capital gains tax.