Stablecoin trading and tax implications in Europe

Stablecoins are increasingly used by cryptocurrency investors to manage market volatility, reallocate positions quickly, and interact with decentralized finance (DeFi) services without converting assets into traditional fiat currencies.

In Austria, tax regulations distinguish between swapping Bitcoin for fiat and swapping it for stablecoins. According to the Austrian Finance Ministry, if a stablecoin qualifies as a cryptocurrency under the Income Tax Act—such as Tether—a direct swap is treated as a crypto-to-crypto transaction. This allows investors to defer tax liabilities on price gains until the stablecoins are eventually sold for legal tender. The historical acquisition costs of the original Bitcoin carry over to the stablecoins.

While stablecoins aim to track the value of assets like the US dollar or the euro, they remain digital tokens rather than legal tender for tax purposes. Even if a stablecoin is classified as e-money under supervisory laws, it may still be treated as a cryptocurrency for income tax guidelines.