Online Earnings in Cryptocurrency — Taxable or Not in 2025?

Crypto has come a long way from being just an underground experiment. These days, people aren’t just buying Bitcoin and holding onto it. They’re using it to invest, trade, stake, play games, and even gamble. While all of that sounds exciting, one thing remains constant—taxes. If you’re making money with crypto in 2025, the government probably wants a cut.

The tricky part? Not all crypto earnings are taxed the same way. Some fall under capital gains tax, some are treated as ordinary income, and others, like gambling winnings, exist in a bit of a legal gray area, depending on where you live. With new regulations tightening around the world, understanding how crypto earnings are taxed is more important than ever.

Investing in Crypto: When Do You Owe Taxes?

If you’ve made money by buying and selling crypto, there’s no escaping capital gains tax. The IRS and most other tax authorities, treat cryptocurrency as property, which means every sale, trade, or conversion counts as a taxable event.

The tax rate you’ll pay depends on how long you hold the asset before selling it.

• If you held it for less than a year, you’re paying short-term capital gains tax, which is the same rate as your regular income tax. In the U.S., that can be anywhere from 10% to 37%.

• If you hold it for more than a year, you get a break with long-term capital gains tax, which is much lower, either 0%, 15%, or 20%, depending on your total income.

It sounds simple enough, but 2025 brings a big change. Crypto brokers, meaning exchanges like Coinbase or Binance, will now report all user transactions directly to the IRS through Form 1099-DA. In short, it’s getting a lot harder to hide crypto profits. Starting in 2026, FIFO (First-In, First-Out) will be the mandatory accounting method, which could mean higher taxable gains for many traders.

Gambling with Crypto: Is It Taxed Like Regular Winnings?

Crypto gambling is growing, and platforms like Golden Panda let people wager cryptocurrency, potentially turning a few coins into a fortune. But just like trading, winnings from gambling don’t always stay off the radar. If you’re playing for real money, or in this case, real crypto, you’ll need to know how it fits into the bigger tax picture.

In the U.S., gambling winnings, whether from a casino, lottery, or online platform, are considered taxable income. You’re supposed to report them, and depending on how much you win, the casino or platform may even send you a tax form.

Here’s where it gets interesting. Some countries tax gambling winnings only when converted to fiat currencies. If you win crypto and just let it sit in your wallet, it might not technically be taxable, at least, not until you cash out. But as governments get stricter about tracking digital assets, relying on that loophole might not be a long-term strategy.

One potential advantage? In some cases, gambling losses can be deducted against winnings, lowering your overall taxable income. But this depends on where you live and how your country treats crypto gambling under the law.

Buying Stocks with Crypto: A Hidden Tax Trap?

Some investors have started using crypto to buy stocks, which seems like a great way to diversify. But here’s where things get tricky: in most cases, using crypto to buy an asset isn’t tax-free.

If you bought Bitcoin for $10,000 and used it to buy stocks when it was worth $50,000, the IRS sees that as a sale of Bitcoin, even though you didn’t convert it to cash. That means you’d owe capital gains tax on the $40,000 profit, even though you just swapped one asset for another.

It’s a frustrating rule, but one you need to keep in mind if you’re using crypto for investments outside the digital space.

Play-to-Earn Games and NFT Rewards: Income or Capital Gains?

Earning crypto by playing games might sound fun (and it is), but tax authorities don’t care how you got the money, they just want their share.

If a game rewards you with crypto or NFTs, the IRS usually treats that as income. That means as soon as you receive those tokens, they’re taxed based on their fair market value at the time. If you later sell them for more money, you’ll also owe capital gains tax on any additional profit.

For example, let’s say a game rewards you with 100 tokens worth $500 when you receive them. That $500 counts as income, even if you don’t cash out. Then, if you sell those tokens six months later for $1,000, you’ll owe capital gains tax on the extra $500.

A lot of people mistakenly think that crypto earnings from gaming fly under the radar, but with blockchain transparency and tighter regulations, tax authorities are paying more attention than ever.

Mining and Staking: Passive Income That Isn’t So Passive for Taxes

Mining and staking both generate cryptocurrency without needing to buy it, but the tax treatment can be a headache.

The IRS considers mining rewards as self-employment income, meaning they’re taxed when received, not just when sold. And if you’re mining as part of a business, you may also owe self-employment tax, which adds another 15.3% to your bill.

Staking rewards follow similar rules. Whether you’re staking Ethereum, Solana, or another proof-of-stake coin, those rewards are taxable the moment they hit your wallet. Just like with mining, if you later sell them for more than their original value, you’ll also owe capital gains tax on any increase.

For many investors, staking feels like a way to generate passive income, but tax authorities see it differently. Keeping detailed records is the best way to avoid surprises when tax season rolls around.

The Legal Grey Area of DeFi Lending and Yield Farming

Decentralized finance (DeFi) continues to grow, offering ways to earn passive income through lending, liquidity pools, and yield farming. But how these earnings are taxed isn’t always clear. Some authorities treat them as interest income, taxed when received, while others classify them as capital gains, taxable only when sold. 

Frequent token swaps in yield farming could trigger multiple taxable events, creating a complex reporting burden. Since DeFi platforms don’t issue tax forms, keeping accurate records is crucial. With regulations evolving, DeFi users should assume their earnings are taxable and plan accordingly to avoid surprises at tax time.

How to Lower Your Crypto Tax Bill in 2025

No one likes paying taxes, but there are legal ways to reduce what you owe. One of the best strategies is holding onto your crypto for over a year before selling, which qualifies you for long-term capital gains tax rates instead of the much higher short-term rates. Another is tax-loss harvesting, where you sell underperforming assets at a loss to offset other gains.

Some investors are also moving their crypto into retirement accounts, such as self-directed IRAs, which allow for tax-free or tax-deferred growth. And if you’re feeling generous, donating crypto to a qualified charity can let you claim a deduction based on its fair market value.

Get Ready for Stricter Rules

The crypto world isn’t as wild as it used to be. In 2025, regulations will be tighter, reporting requirements will be stricter, and tax authorities will be paying closer attention than ever. Whether you’re trading, gaming, staking, or gambling, understanding how your crypto earnings are taxed is crucial.