Crypto Taxation & Digital Assets Law:
2026 Guide
Global Regulations, Compliance & Tax Strategies (100 Questions)
1. In many jurisdictions (like the US), how is cryptocurrency generally classified for tax
purposes?
A) As foreign currency
B) As property
C) As a collectible
D) As real estate
Correct Answer: B) As property
2. When a user sells cryptocurrency for fiat money (e.g., USD), what tax event typically
occurs?
A) A Capital Gain or Loss
B) Ordinary Income
C) A Value Added Tax (VAT) event
D) No tax event until the money is withdrawn to a bank
Correct Answer: A) A Capital Gain or Loss
3. Trading one cryptocurrency directly for another (e.g., swapping BTC for ETH) is
considered:
A) A non-taxable event
B) A taxable event triggering a capital gain or loss
C) A tax-free like-kind exchange
D) A charitable donation
Correct Answer: B) A taxable event triggering a capital gain or loss
4. Buying goods or services using cryptocurrency is treated by tax authorities as:
A) A standard cash transaction
B) Selling the crypto at its Fair Market Value (triggering a capital gain/loss)
C) A tax-free transaction
D) A corporate dividend
Correct Answer: B) Selling the crypto at its Fair Market Value (triggering a capital
gain/loss)
5. "Cost Basis" of a cryptocurrency refers to:
A) The current market price
,B) The original value of the asset for tax purposes (purchase price plus fees)
C) The lowest price it reached in the year
D) The amount of tax owed
Correct Answer: B) The original value of the asset for tax purposes (purchase price plus
fees)
6. Holding cryptocurrency for more than one year before selling typically qualifies the
asset for:
A) Zero taxes
B) Long-term capital gains tax rates (usually lower)
C) Short-term capital gains tax rates (usually higher)
D) A penalty fee
Correct Answer: B) Long-term capital gains tax rates (usually lower)
7. Holding cryptocurrency for less than one year before selling is subject to:
A) Long-term capital gains tax rates
B) Short-term capital gains tax rates (taxed as ordinary income)
C) Estate tax
D) Corporate tax
Correct Answer: B) Short-term capital gains tax rates (taxed as ordinary income)
8. Receiving cryptocurrency as a salary or payment for services is taxed as:
A) Ordinary Income at the Fair Market Value upon receipt
B) A capital gain only
C) A tax-free gift
D) A dividend
Correct Answer: A) Ordinary Income at the Fair Market Value upon receipt
9. "FIFO" is a common crypto accounting method standing for:
A) First In, First Out
B) Fast Income, Fast Out
C) Fiat In, Fiat Out
D) Fixed Interest, Fixed Obligation
Correct Answer: A) First In, First Out
10. "HIFO" is a tax lot identification method used to minimize taxes, meaning:
A) Highest Income, First Out
B) Highest In, First Out
C) Heavy Investment, Fast Out
, D) Half In, Full Out
Correct Answer: B) Highest In, First Out
11. The "Wash Sale Rule" generally prevents taxpayers from:
A) Washing their physical cash
B) Claiming a tax loss if they buy the same or a "substantially identical" asset within 30 days
C) Selling crypto on Sundays
D) Using laundromats to pay for crypto
Correct Answer: B) Claiming a tax loss if they buy the same or a "substantially identical"
asset within 30 days
12. In 2026, the European Union's comprehensive crypto regulation framework is fully
enforced. It is called:
A) GDPR
B) MiCA (Markets in Crypto-Assets)
C) DAC6
D) PSD2
Correct Answer: B) MiCA (Markets in Crypto-Assets)
13. Under MiCA, a "CASP" stands for:
A) Crypto-Asset Service Provider
B) Centralized Asset System Protocol
C) Crypto And Security Program
D) Certified Asset Secure Platform
Correct Answer: A) Crypto-Asset Service Provider
14. What does the "Travel Rule" (from the FATF) require crypto exchanges to do?
A) Ban users from traveling with crypto wallets
B) Collect and share originator and beneficiary information for crypto transfers over a certain
threshold
C) Charge a tax on international flights
D) Ensure all servers are located in one country
Correct Answer: B) Collect and share originator and beneficiary information for crypto
transfers over a certain threshold
15. "Unhosted Wallets" (Self-custodial wallets) face regulatory scrutiny because:
A) They use too much electricity
B) They allow individuals to transfer funds without a central financial intermediary, complicating
KYC/AML
C) They are illegal to download
D) They easily break computers
Correct Answer: B) They allow individuals to transfer funds without a central financial
intermediary, complicating KYC/AML
16. In the US, the "Howey Test" is a legal framework used to determine whether a digital
asset is a:
A) Commodity
B) Security
C) Currency
2026 Guide
Global Regulations, Compliance & Tax Strategies (100 Questions)
1. In many jurisdictions (like the US), how is cryptocurrency generally classified for tax
purposes?
A) As foreign currency
B) As property
C) As a collectible
D) As real estate
Correct Answer: B) As property
2. When a user sells cryptocurrency for fiat money (e.g., USD), what tax event typically
occurs?
A) A Capital Gain or Loss
B) Ordinary Income
C) A Value Added Tax (VAT) event
D) No tax event until the money is withdrawn to a bank
Correct Answer: A) A Capital Gain or Loss
3. Trading one cryptocurrency directly for another (e.g., swapping BTC for ETH) is
considered:
A) A non-taxable event
B) A taxable event triggering a capital gain or loss
C) A tax-free like-kind exchange
D) A charitable donation
Correct Answer: B) A taxable event triggering a capital gain or loss
4. Buying goods or services using cryptocurrency is treated by tax authorities as:
A) A standard cash transaction
B) Selling the crypto at its Fair Market Value (triggering a capital gain/loss)
C) A tax-free transaction
D) A corporate dividend
Correct Answer: B) Selling the crypto at its Fair Market Value (triggering a capital
gain/loss)
5. "Cost Basis" of a cryptocurrency refers to:
A) The current market price
,B) The original value of the asset for tax purposes (purchase price plus fees)
C) The lowest price it reached in the year
D) The amount of tax owed
Correct Answer: B) The original value of the asset for tax purposes (purchase price plus
fees)
6. Holding cryptocurrency for more than one year before selling typically qualifies the
asset for:
A) Zero taxes
B) Long-term capital gains tax rates (usually lower)
C) Short-term capital gains tax rates (usually higher)
D) A penalty fee
Correct Answer: B) Long-term capital gains tax rates (usually lower)
7. Holding cryptocurrency for less than one year before selling is subject to:
A) Long-term capital gains tax rates
B) Short-term capital gains tax rates (taxed as ordinary income)
C) Estate tax
D) Corporate tax
Correct Answer: B) Short-term capital gains tax rates (taxed as ordinary income)
8. Receiving cryptocurrency as a salary or payment for services is taxed as:
A) Ordinary Income at the Fair Market Value upon receipt
B) A capital gain only
C) A tax-free gift
D) A dividend
Correct Answer: A) Ordinary Income at the Fair Market Value upon receipt
9. "FIFO" is a common crypto accounting method standing for:
A) First In, First Out
B) Fast Income, Fast Out
C) Fiat In, Fiat Out
D) Fixed Interest, Fixed Obligation
Correct Answer: A) First In, First Out
10. "HIFO" is a tax lot identification method used to minimize taxes, meaning:
A) Highest Income, First Out
B) Highest In, First Out
C) Heavy Investment, Fast Out
, D) Half In, Full Out
Correct Answer: B) Highest In, First Out
11. The "Wash Sale Rule" generally prevents taxpayers from:
A) Washing their physical cash
B) Claiming a tax loss if they buy the same or a "substantially identical" asset within 30 days
C) Selling crypto on Sundays
D) Using laundromats to pay for crypto
Correct Answer: B) Claiming a tax loss if they buy the same or a "substantially identical"
asset within 30 days
12. In 2026, the European Union's comprehensive crypto regulation framework is fully
enforced. It is called:
A) GDPR
B) MiCA (Markets in Crypto-Assets)
C) DAC6
D) PSD2
Correct Answer: B) MiCA (Markets in Crypto-Assets)
13. Under MiCA, a "CASP" stands for:
A) Crypto-Asset Service Provider
B) Centralized Asset System Protocol
C) Crypto And Security Program
D) Certified Asset Secure Platform
Correct Answer: A) Crypto-Asset Service Provider
14. What does the "Travel Rule" (from the FATF) require crypto exchanges to do?
A) Ban users from traveling with crypto wallets
B) Collect and share originator and beneficiary information for crypto transfers over a certain
threshold
C) Charge a tax on international flights
D) Ensure all servers are located in one country
Correct Answer: B) Collect and share originator and beneficiary information for crypto
transfers over a certain threshold
15. "Unhosted Wallets" (Self-custodial wallets) face regulatory scrutiny because:
A) They use too much electricity
B) They allow individuals to transfer funds without a central financial intermediary, complicating
KYC/AML
C) They are illegal to download
D) They easily break computers
Correct Answer: B) They allow individuals to transfer funds without a central financial
intermediary, complicating KYC/AML
16. In the US, the "Howey Test" is a legal framework used to determine whether a digital
asset is a:
A) Commodity
B) Security
C) Currency
