Capital Gains

In the U.S., crypto is treated as property for tax purposes. If you buy ETH at $2,000 and sell it at $3,000, you have a $1,000 capital gain. Short-term gains (held less than a year) are taxed as ordinary income. Long-term gains (held more than a year) get preferential tax rates.

For USDC specifically, capital gains are usually minimal since it's designed to stay at $1. If you bought USDC at $1.00 and sold at $1.00, there's no gain. However, if you bought during the March 2023 depeg at $0.90 and sold at $1.00, that $0.10 difference is a capital gain.

Yield earned on USDC (from lending, liquidity provision, etc.) is typically taxed as ordinary income, not capital gains.