Buying and selling related crypto positions to exploit price differences across markets, pools, or venues.
Every leg is a disposal, and the profit is short-term capital gain (or ordinary income if the activity rises to a business). High-frequency arbitrage produces thousands of small gains and losses that all have to be reconciled, plus fees paid in gas that are their own disposals.
Capital gain for most individuals. If the activity is frequent, substantial, and continuous enough to be a trade or business, ordinary treatment and self-employment tax can apply.
Source: IRS Notice 2014-21; IRC 1221
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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