I'm a developer, not a tax professional. This guide is researched from primary sources (linked in each section) but hasn't been reviewed by a CPA. Verify against official guidance before filing.
A crypto-to-crypto swap is treated as: sell Token A at today's price → buy Token B at today's price. The "sell" part creates a taxable gain or loss. The "buy" part sets your new cost basis in Token B.
Before 2018, some US investors argued that swapping one crypto for another qualified as a "like-kind exchange" under Section 1031, which would defer the tax. The Tax Cuts and Jobs Act (2017) closed this permanently — Section 1031 now applies only to real property. Crypto-to-crypto swaps have been fully taxable in the US since January 1, 2018.
Gain / Loss = Fair Market Value of Token Received − Cost Basis of Token Given Up
Starting with 2025 transactions reported in 2026, all centralised US exchanges must issue Form 1099-DA. reporting your gross proceeds from crypto disposals — including crypto-to-crypto swaps. The IRS now receives this data automatically. The era of voluntary swap reporting is over. Report every swap on Form 8949, then summarise on Schedule D.
Gain / Loss = GBP Market Value of Token Received − Allowable Cost from Section 104 Pool
| Rule | What it means for swaps |
|---|---|
| Same-Day Rule | If you acquire the same token on the same day as a disposal, the acquisition is matched first |
| 30-Day (Bed & Breakfast) Rule | If you sell a token and rebuy within 30 days, the disposal is matched against the repurchase — prevents artificial loss harvesting |
| Section 104 Pool | All remaining holdings averaged into one pool — you cannot cherry-pick specific coins to minimise your gain |
| CGT rate on gain | 18% (Basic Rate) or 24% (Higher Rate) — on gains above the £3,000 Annual Exempt Amount |
US investors can use Specific Identification to choose exactly which coins they are selling (e.g. sell the coins with the highest cost basis first to minimise gains). UK investors cannot — Section 104 pooling is mandatory. This makes cost basis tracking in the UK simpler but gives investors less flexibility to optimise their tax position.
The GENIUS Act, signed in July 2025, created the first federal regulatory framework for payment stablecoins — but it did not change stablecoin tax treatment. Swapping crypto for a stablecoin is still a taxable disposal under IRS Notice 2014-21. Regulatory legitimacy for stablecoins does not equal tax exemption.
If you swap USDC for USDT, this is technically a disposal of USDC at its fair market value. If USDC was worth exactly $1.00 and your cost basis was $1.00, there is no gain — but if there is any fractional price difference (which can occur momentarily in stablecoin markets), there is a technical gain or loss. This is small in practice but real in principle, and in 2026 Form 1099-DA may flag these transactions automatically.
| Transaction type | US tax treatment | UK tax treatment |
|---|---|---|
| Swap on CEX (Binance, Coinbase) | Taxable disposal | Taxable disposal |
| Swap on DEX (Uniswap, Curve) | Taxable disposal | Taxable disposal |
| Bridging same token cross-chain | Generally not taxable if same asset | Likely not taxable — same asset transferred |
| Liquidity pool deposit (e.g. ETH + USDC) | Likely taxable disposal of tokens deposited | Likely taxable — HMRC treats as disposal |
| Receiving LP tokens in return | New asset — cost basis = FMV at receipt | New asset — cost basis = GBP value at receipt |
In 2025, Congress repealed IRS rules that would have required DeFi platforms to report user transactions as brokers. However, this repeal only removes the third-party reporting obligation — it does not remove your personal tax liability. DeFi swap gains are still taxable and must still be reported by you. Most on-chain activity is also publicly visible on the blockchain, which the IRS uses alongside Chainalysis data to identify non-compliant traders.
You did not receive a single pound or dollar in this transaction — yet you owe real tax in both countries. This is why crypto-to-crypto swap tax is the most common unexpected liability for crypto investors. The swap felt like a portfolio move; the IRS and HMRC saw it as a sale.