In a nutshell: No. In both the US and Canada, simply buying crypto with regular money and holding it is not a taxable event, even if its price goes up a lot. Tax usually starts only when you sell, swap, spend or give away the crypto, or when you receive new coins as income (for example staking rewards or airdrops). Educational only; not financial or tax advice.
Last updated: October 11, 2026.
“HODL” is one of the most popular strategies in crypto, and a common worry follows it: if your Bitcoin doubles while it sits in your wallet, do you owe tax on that paper profit? The good news is that unrealized gains are not taxed in the US or Canada. The catch is that several things people do while “just holding” can quietly create a tax event. This guide explains what holding really means for taxes, the exceptions to watch, and what you still need to report. If you plan to sell later, read our companion guide, If I Sell Crypto, Do I Pay Taxes?
Table of contents
If I Hold Crypto, Do I Pay Taxes? The Short Answer
No, not just for holding. The IRS treats crypto as property, and property is generally taxed when you dispose of it, not while you own it. The IRS digital assets page lists holding a digital asset in a wallet or account, and buying digital assets with US dollars, as examples of activity where you can answer “No” to the digital asset question on your tax return. Canada works the same way: the CRA’s crypto-asset guidance ties tax to dispositions (selling, trading, gifting, spending) and to income you earn from crypto.
So if you bought 0.5 BTC two years ago with cash and have never touched it, you have no crypto tax to pay for those years, even if the value has grown. You will only calculate a gain or loss when you eventually dispose of it.
Why Holding Is Not Taxed: Unrealized vs Realized Gains
Tax systems in the US and Canada separate two kinds of gains:
- Unrealized gain: the increase in value of something you still own. It exists only on paper and can disappear if the price falls. It is not taxed.
- Realized gain: the profit you lock in when you dispose of the asset. This is what gets taxed, using your cost basis (what you paid, including fees) and your proceeds.
This is the same rule that applies to stocks. You do not pay tax on a stock that rises in your brokerage account; you pay when you sell it. The IRS explains the basics in Topic 409, Capital gains and losses.
Holding also matters for the rate you pay later. In the US, crypto held for more than one year before you sell qualifies for long-term capital gains rates, which are usually lower than short-term rates. That is one reason long-term holders often pay less tax overall. Our crypto capital gains tax guide covers the rates in detail.
When Holding Crypto Can Still Create Tax
Many investors think they are “just holding,” but their coins are actually doing something. These are the most common situations where tax applies even though you never sold to cash:
1. Staking rewards
If you stake coins like ETH or SOL, the rewards you receive are generally treated as ordinary income. In the US, Revenue Ruling 2023-14 says staking rewards are included in income in the year you gain control of them, at their fair market value at that time. Holding the original staked coins is not taxed, but the new coins are. See crypto staking taxes for the US and Canada details.
2. Airdrops and hard forks
Receiving free tokens from an airdrop, or new coins after a hard fork, can count as income when you receive them and can control them. The IRS addressed this in Revenue Ruling 2019-24.
3. Interest and lending rewards
Earning yield by lending crypto on a platform, or holding coins in an “earn” product, generally produces income when the rewards are paid.
4. Swapping one coin for another
Trading BTC for ETH, or any token for a stablecoin, is a disposal. You still “hold crypto” afterward, but the trade itself is taxable in both countries. Many people are surprised by this when they rebalance a portfolio.
5. Spending crypto
Buying a coffee, a gift card or a laptop with crypto is treated as selling the crypto for its value at that moment. If it rose since you bought it, you have a gain.
6. Getting paid in crypto
If an employer or client pays you in crypto, the value when you receive it is income, even if you hold every coin afterward.
Actions That Are Usually Not Taxable
These common actions generally do not trigger tax on their own:
- Buying crypto with US or Canadian dollars. A purchase sets your cost basis; it is not a gain.
- Holding coins on an exchange or in your own wallet. Where you store them does not change the answer.
- Moving crypto between your own wallets or accounts, for example from an exchange to a cold wallet. Network fees can have their own treatment, which we explain in If I Transfer Crypto, Do I Pay Taxes?
- Watching the price fall. A paper loss, like a paper gain, is not recognized until you dispose of the asset. That is why investors who want to use a loss must actually sell, a strategy covered in our crypto tax loss harvesting guide.
Gifting is a special case. In the US, giving crypto to someone is generally not a taxable sale for you, though large gifts can require a gift tax return. In Canada, a gift is usually treated as a disposition at fair market value, so it can create a gain for the giver.
Do You Have to Report Crypto You Hold? (US)
Every Form 1040 includes a yes/no digital asset question. According to the IRS, if your only activity during the year was holding crypto, moving it between your own wallets, or buying it with real currency, you can generally check “No.” If you received crypto as rewards or payment, or sold, exchanged or spent it, you check “Yes” and report the activity.
Brokers are also reporting more. Starting with transactions in 2025, custodial platforms began issuing Form 1099-DA for sales. Pure holding does not appear on a 1099-DA because nothing was sold.
Foreign accounts are a separate topic. Rules on whether crypto held on foreign exchanges must be reported (for example on FBAR or Form 8938) depend on the account and the amounts, and guidance has been evolving. If you hold large amounts on a non-US platform, check with a tax professional.
Holding Crypto in Canada
For Canadians, holding crypto is also not taxed. The CRA expects you to report when you dispose of crypto, and to report income from staking, mining or being paid in crypto. When you do sell, only 50% of a capital gain is included in income (the proposed increase to the inclusion rate was cancelled in 2025). See the CRA page on line 12700, taxable capital gains.
Two Canadian points to keep in mind:
- Trading as a business. If you trade very frequently, the CRA may treat profits as business income (fully taxable) instead of capital gains. Long-term holding usually supports capital treatment.
- Foreign property reporting. Canadians whose specified foreign property costs more than $100,000 CAD at any time in the year may need to file Form T1135. Whether crypto counts depends on where and how it is held, so check the CRA T1135 questions and answers.
For the full picture, read cryptocurrency tax in Canada.
Why Records Matter Even If You Never Sell
Holding is tax-free today, but your future tax bill depends on records you keep now. When you sell in five or ten years, you will need to prove:
- The date you bought each lot of coins.
- The price and fees you paid (your cost basis).
- Any transfers between wallets, so the coins can be traced.
- The value of any rewards or airdrops when received, since that value becomes their cost basis.
Exchanges can close or delete old history, so download your transaction CSVs every year and store them safely. Crypto tax software can import these files, but only if you have them. The CRA asks Canadians to keep records for at least six years.
Simple Example
Sara in Ohio buys 1 ETH for $2,000 in January and holds it. By December it is worth $3,500. She owes no tax on the $1,500 increase. During the year she also staked another 2 ETH and received 0.06 ETH in rewards worth $180 in total when received. That $180 is income, even though she sold nothing. If she later sells the rewards, her cost basis for them is the $180 she already reported.
FAQ
Do I pay taxes on crypto if I don’t sell?
Generally no. Unsold crypto bought with cash is not taxed in the US or Canada. Exceptions are income such as staking rewards, airdrops or crypto received as payment.
If I buy crypto, do I have to pay taxes?
No. Buying crypto with dollars is not a taxable event. It simply sets your cost basis for the future.
How long do I have to hold crypto to avoid taxes?
There is no holding period that makes a sale tax-free. In the US, holding more than one year gives you long-term rates, which are lower. Canada does not have a long-term discount; the 50% inclusion rate applies regardless of holding time.
Is holding stablecoins taxable?
Holding them is not, but swapping another coin into a stablecoin is a disposal, and interest earned on stablecoins is income.
Do I report crypto I only held on my tax return?
In the US, you generally answer “No” to the digital asset question if you only held or bought with dollars. In Canada, there is nothing to report on pure holding, though foreign property rules may apply to large balances.
Want to build a position slowly while you hold? Try our approach to dollar cost averaging crypto.
Sources
- IRS: Digital assets
- IRS: Topic 409, Capital gains and losses
- IRS: Revenue Ruling 2023-14 (staking rewards)
- IRS: Revenue Ruling 2019-24 (forks and airdrops)
- IRS: Understanding your Form 1099-DA
- CRA: Understanding crypto-assets and your tax obligations
- CRA: Line 12700, Taxable capital gains
- CRA: Questions and answers about Form T1135
Educational content only. This is not financial, legal, tax or investment advice. Tax rules change; talk to a qualified tax professional about your situation.
