How is crypto tax treatment determined?

Multiple independent blockchain data sources parse each transaction in parallel. An AI consensus engine reconciles them, applies 14,000+ verified protocol rules, and maps the result to one US tax treatment: disposal, income, or non-taxable -- or flags it for review.

Updated August 2026 · CryptoTaxEdge Team

From raw transaction to treatment

A transaction hash is decoded into its economic event -- what was sent, received, and to whom. The event maps to a canonical category (swap, reward, liquidity, bridge), and the category maps to a treatment under US framing: disposal under IRC §1001, ordinary income under §61 and Rev. Rul. 2023-14, or non-taxable. Every result carries a confidence score and the reasoning.

The honesty rule

When evidence disagrees or a pattern is genuinely novel, the result says so: it ships flagged for professional review with the candidate treatment and the evidence, instead of a guess presented as settled. Grey-area categories -- LP positions, wrapping, liquid staking -- expose a documented house default and the alternative position, configurable per firm.

Where to see it work

The full machine-readable contract is published as a versioned schema, and any transaction can be checked free in the Classification Explorer -- ten a day, no signup.

This is informational only, not tax advice; verify with a qualified tax professional before filing.