Definition ∞ Capital Gains Tax is a levy imposed on the profit realized from the sale of an asset. This tax applies when a digital asset, such as a cryptocurrency or NFT, is sold for a price higher than its original purchase cost. It represents a fiscal obligation on the increase in asset value over a holding period. The calculation typically considers the difference between the selling price and the cost basis of the asset.
Context ∞ Within the digital asset sector, the application of capital gains tax remains a significant area of regulatory scrutiny and public discussion across various jurisdictions. Clarity on how different types of crypto transactions, including staking rewards or airdrops, are classified for tax purposes continues to be a point of debate. Monitoring legislative updates regarding digital asset taxation is essential for participants in the crypto economy.
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