Glossary

Fair market value (crypto)

Fair market value is the price a digital asset would sell for on the open market at a given time, used to measure income when crypto is received and proceeds when it is spent or traded.

How it works

Fair market value is what a digital asset would sell for on the open market at the time of the transaction. For exchange-traded assets the exchange price at the timestamp is accepted; for thinly traded tokens and NFTs a reasonable, consistently applied method with documentation is required. Income items (rewards, airdrops, payment for services) are measured at receipt; proceeds from spending or trading are measured at the disposal.

Why it matters

Every non-cash transaction is measured in dollars at a moment, so the timestamp and the price source are what an auditor checks.

Related: cost basis, taxable event.

Guides that cover fair market value

Related terms

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Definitions are general information, not legal advice, and may not reflect the most recent changes in law.

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