Quick answer
A capital gain is generally the increase in value recognized when an asset is disposed of, subject to the relevant tax rules.
What is Capital gains?
Capital-gains tax concepts can apply when a person sells, exchanges, or otherwise disposes of an asset for more than its tax basis. Crypto treatment varies by jurisdiction and by the type of activity.
The useful way to approach this term is to separate its definition from the assumptions people often attach to it. In crypto, the same word can appear in a protocol rule, a user interface, a market-data label, or a marketing claim. Check which layer the explanation is describing.
Why does capital gains matter?
Swapping one token for another or spending crypto may have tax consequences even when no bank withdrawal occurs. Recordkeeping for dates, amounts, fees, basis, and transaction purpose is important.
Concrete example
See it in a real situation
A taxpayer buys an asset for $1,000 and later disposes of it for $1,400. The taxable calculation depends on local rules, basis, holding period, fees, and the nature of the transaction.
Common misconceptions
What this term does not mean
- A price increase on an asset that has not been disposed of is not treated identically in every tax system.
- This definition is not personal tax advice or a filing calculation.
Related terms
Sources and further reading
Definitions are written for education and checked against the sources below where relevant. A source can explain a protocol or rule without endorsing every product built around it.