Crypto-to-Crypto Swap

Definition

A crypto-to-crypto swap is the exchange of one cryptocurrency for another, such as trading Bitcoin for Ethereum, without converting to fiat currency. Because the IRS treats virtual currency as property, each swap is a taxable disposal requiring recognition of gain or loss based on the difference between the asset's cost basis and its fair market value at the time of the exchange. CPAs must track each swap as a separate taxable event with its own holding period and character determination.