This is one of the few questions in crypto tax where the authority has published a direct answer rather than a treatment that has to be assembled from several pages. The IRS digital assets page states a definition, lists what falls inside it, and says which category of thing a digital asset is before any figure is computed. Each of those is quoted below from the page as it read on 8 September 2026.
The definition, in the sentence the page uses
The digital assets page states it directly: “The tax definition of a digital asset is any digital representation of value recorded on a cryptographically secured, distributed ledger (blockchain) or similar technology”, citing the Infrastructure Investment and Jobs Act. It adds a plainer sentence beside it: “A digital asset is stored electronically and can be bought, sold, owned, transferred or traded.” The operative words are the recording medium and the representation of value, not the name of any particular coin. A thing is inside the definition because of how it is recorded, which is why the page can name the category without listing every instance of it.
The three examples the page lists
Under the heading of examples the page gives three: convertible virtual currencies and cryptocurrencies such as Bitcoin, stablecoins, and non fungible tokens. It then explains the first of those, describing a digital asset that has an equivalent value in real currency, or that acts as a substitute for real currency, as convertible virtual currency. That is a list of examples on the authority's own page and not an exhaustive schedule, which matters when a reader is trying to place an asset the page does not mention.
The classification that comes before any figure
One sentence on the page decides the shape of every calculation that follows it: “For U.S. tax purposes, digital assets are considered property, not currency.” Property, not currency, is why a disposal produces a gain or a loss at all, and why the page goes on to split gains by holding period: “Short-term capital gain: If you held the digital asset as a capital asset for one year or less before selling, exchanging, or otherwise disposing of the digital asset.” and “Long-term capital gain: If you held the digital asset as a capital asset for more than one year before selling, exchanging, or otherwise disposing of it.” A reader who takes only one line from the definition should take that one.
Where the definition is actually used
The definition is not academic: it decides how a return is answered. The page reproduces the question that appears on federal income tax returns, which reads “At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” It names the returns carrying a version of that question, among them Form 1040 and Form 1040-SR, Form 1040-NR, Form 1041 for estates and trusts, and Form 709. A person who cannot say whether their holding is a digital asset cannot answer the first question the return asks about it.
Other questions people ask
What is the IRS definition of a digital asset?
The digital assets page defines it as any digital representation of value recorded on a cryptographically secured, distributed ledger, meaning a blockchain, or similar technology, citing the Infrastructure Investment and Jobs Act. The same page adds that a digital asset is stored electronically and can be bought, sold, owned, transferred or traded.
Is a digital asset treated as currency?
No. The page states that for US tax purposes digital assets are considered property, not currency. That classification is what makes a disposal capable of producing a capital gain or loss, and it is stated before any of the page's guidance on figures.
Are NFTs and stablecoins included?
Both appear in the examples the page lists, alongside convertible virtual currencies and cryptocurrencies such as Bitcoin. The page presents them as examples rather than as a closed list, so an asset absent from the three is placed by reading it against the definition rather than by its absence.
Why does the definition appear on my tax return?
Because the return asks about it. The page reproduces the question asked at the top of several returns, covering receipt as a reward, award or payment for property or services, and sale, exchange or other disposal of a digital asset or a financial interest in one. The definition is what decides the answer.