Glossary

Stablecoin

A stablecoin is a digital asset designed to hold a fixed value, usually one dollar, and despite the stable price it is property for tax purposes, so trading into or out of one is a taxable event.

How it works

A stablecoin is designed to hold a fixed value, usually one dollar. It is property for tax purposes, so converting Bitcoin to USDC is a sale of the Bitcoin with gain or loss measured at that moment, and selling USDC for dollars is a reportable disposal even if the gain is near zero. Stablecoin yield and rewards are ordinary income.

Why it matters

Traders who park profits in stablecoins have realized those profits, even though no dollars left the exchange. Congress has debated exempting small payment transactions; as of this writing no such exemption is law.

Related: taxable event. Read more: the case for a stablecoin exemption.

Guides that cover stablecoin

Related terms

Browse the full glossary

Where this comes up in our work

Crypto tax attorneys

IRS crypto audits and letters, unreported years, theft loss opinions, and returns that survive an audit.

See the practice page →

Have a question about this?

Our tax attorneys handle IRS audits, crypto tax, offshore disclosures, and opinion letters for clients nationwide. Consultations are confidential.

Schedule a Confidential Consultation

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

Get Started