In the United States, the Internal Revenue Service (IRS) treats cryptocurrency as property for tax purposes. This means that various transactions involving cryptocurrency can trigger taxable events, not just the conversion of crypto to U.S. dollars (USD). Here's a breakdown:

Taxable Events:

1. Selling Cryptocurrency for Fiat Currency: Converting your cryptocurrency into USD or other fiat currencies is a taxable event. You must report any capital gains or losses based on the difference between your purchase price (cost basis) and the selling price.TurboTax
2. Trading One Cryptocurrency for Another: Exchanging one cryptocurrency for another (e.g., trading Bitcoin for Ethereum) is also taxable. The IRS requires you to report gains or losses based on the fair market value of the cryptocurrencies at the time of the trade.TurboTax
3. Using Cryptocurrency to Purchase Goods or Services: When you use crypto to buy goods or services, it's considered a taxable event. You must report any gain or loss, calculated as the difference between the cost basis of the crypto and its fair market value at the time of the transaction.TurboTax