The amount of tax you pay depends on how you received the cryptocurrency, and in some cases, the time period you kept it. Rules differ depending on whether the cryptocurrency was mined or purchased.
Cryptocurrency holdings are viewed more as a form of property than income. When you sell your cryptocurrency holdings, you will generally be taxed on the capital gain you made. Losses are recorded as capital losses. Taxes are levied on short-term gains if the holding has been held for less than one year. Long-term gains are taxed if it's been held for over a year.
Cryptocurrency mining is not regulated the same way. Commercial and hobby miners are both required to declare their mining income. The IRS may submit your Bitcoin or other cryptocurrency earnings from mining work to the payer or mining pools. The miner records the sum as business revenue, even if it is paid in kind rather than cash.
Wash sale rule is coming to the bitcoin market. Crypto-taxation regulations are needed as more traders invest their money in digital assets and cryptocurrencies.
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