At this time, DeFi protocols like Curve.Fi don’t provide tax forms to users. As a result, trying to calculate your taxes can require serious time and effort.
In this guide, we’ll break down everything you need to know to calculate and report your Curve.Fi transactions on your taxes. We’ll discuss how Curve.Fi transactions are taxed and lay out a simple process that can help you save hours of time and effort during tax season.
Curve.Fi is a decentralized exchange launched in 2020 specifically for stablecoin trading. Because stablecoins are less volatile than other assets, the protocol has lower fees and less risk of impermanent loss than other decentralized exchanges.
While Curve.Fi may not offer the same range of assets as an exchange like Uniswap, the protocol enables liquidity providers to earn rewards while mitigating risk.
In the United states, cryptocurrency is subject to capital gains and ordinary income tax.
For more information, check out our guide to cryptocurrency taxes.
Although DeFi protocols like Curve.Fi don’t report to the IRS, it’s important to remember that all transactions on the Ethereum blockchain are publicly visible. In the past, the IRS has worked with contractors like Chainalysis to analyze the blockchain and crack down on tax fraud.
At this time, the IRS hasn’t released guidance on how DeFi protocols like Curve.Fi are taxed. As a result, tax professionals rely on previous guidance to determine the tax implications of certain transactions.
We can reasonably assume the following.
For more information, check out our guide to DeFi taxes.
Trading stablecoins on Curve.Fi is subject to capital gains tax.
Despite the fact that stablecoins were designed explicitly for transactions, they are taxed the same as other cryptocurrencies. That means you’re required to report disposals of stablecoins on your tax return (though your capital gain will likely be close to 0).
For more information, check out our guide to stablecoin taxes.
The IRS hasn’t released explicit guidance on how liquidity pools are taxed. As a result, there are different approaches you can take depending on your risk appetite.
The conservative approach is to treat depositing cryptocurrency in a liquidity pool as a taxable crypto-to-crypto swap.
The aggressive approach is to treat this as a non-taxable deposit.
If you’re unsure which approach to take, reach out to your tax professional.
At this time, protocols like Curve.Fi don’t provide tax forms to users. That means it’s your responsibility to track the following information for all of your transactions.
If you’re having trouble keeping track of the information you need on your tax return, crypto tax software can help. With CoinLedger, you can report your Curve.Fi taxes in just minutes.
Here’s how you can report your Curve.Fi taxes with CoinLedger.
And that’s it! Once you’ve imported your other wallets and exchanges, you can generate a comprehensive tax report with the click of a button.
Looking for an easy way to file your crypto taxes? Try CoinLedger.
More than 300,000+ investors around the globe use CoinLedger to take the stress out of tax season.