Cryptocurrency isn’t going away. And whether you love it, hate it, own it, or wouldn’t touch it with a ten-foot pole, your clients may already be using it. That means tax professionals need to understand what they’re talking about.
Here’s the tricky part: your crypto clients might not even understand exactly what they’re doing. They throw around terms like “staking,” “swapping,” and “DeFi,” sometimes using them incorrectly or leaving out important details. If you’re not fluent enough in crypto to ask the right follow-up questions, those misunderstandings can turn into tax reporting problems pretty quickly. You don’t need to become a blockchain developer. But you do need to understand the language well enough to figure out what your client actually did and what the tax consequences may be.
Crypto users tend to be tech-forward, risk-tolerant, and highly independent. Many jumped into the space without fully understanding the tax implications and are now playing catch-up.
Here’s where it gets interesting. A client might tell you they earned “interest,” when they actually received staking rewards. They might say they “swapped” one coin for another without realizing they disposed of one asset and potentially triggered a taxable gain or loss. They may be moving assets through DeFi protocols without realizing that lending, borrowing, liquidity pools, rewards, and other transactions can raise completely different tax questions.
The IRS treats digital assets as property for federal income tax purposes, and exchanging one digital asset for another can be a reportable disposition. Staking rewards are generally includible in gross income when the taxpayer gains dominion and control over them.
When a client comes to you with multiple wallets, exchanges, and hundreds or thousands of transactions described in crypto slang, you need more than the numbers. You need to understand what actually happened.
If you’re serious about serving clients who own digital assets, you can’t afford to be completely confused by the terminology.
Understanding both the language and the underlying transaction helps you:
And this is becoming even more important as digital-asset reporting develops. Brokers began reporting gross proceeds for certain digital-asset transactions occurring on or after January 1, 2025, using Form 1099-DA, and basis reporting applies to certain transactions beginning January 1, 2026. That doesn't eliminate the need for good records or good advice. If anything, it gives tax professionals another reason to understand what their clients are doing.
Bottom line, crypto clients need advisors who get it. If you don't understand the language, it's much harder to understand the tax return.
You don’t have to memorize the entire crypto dictionary, but there are some terms every tax professional working with digital assets should recognize:
The terminology matters because two clients can use the same word to describe two very different transactions. Don't prepare the return based on the slang. Ask enough questions to understand what actually happened.
You don’t need to become a blockchain developer to serve crypto clients well. You need a process.
Crypto isn’t some fringe issue tax professionals can assume will disappear. The IRS treats digital assets as property, asks about digital-asset activity on numerous federal tax returns, and continues expanding information reporting in this area.
You don’t need to know how to code a blockchain. You need to know enough to ask the right questions. Understand what your client means when they say they “swapped,” “staked,” “bridged,” or started playing around in DeFi. Then figure out what actually happened before deciding how it belongs on the tax return.
If you’re a tax professional, this is exactly why continuing education matters. My Main Street Tax Pro Certification is designed to help CPAs, EAs, attorneys, and other advisors go beyond tax preparation and become better strategic advisors for their clients. If you want to expand your knowledge, sharpen your planning skills, and become the advisor clients come to with the complicated questions, explore the Certification and take your practice to the next level.
And if you’re a business owner or investor dealing with crypto and your tax professional doesn’t understand what you’re talking about, find one who does. Explore the Tax Advisor Network to connect with a Main Street Certified Tax Advisor who understands proactive tax planning and can help you make sense of your bigger tax picture. Crypto can get complicated fast. You shouldn’t have to explain the tax strategy to the person preparing your return.