Supplying crypto to a lending protocol so borrowers can use it, typically in exchange for variable yield.
The yield is ordinary income, like interest, when it is earned and accessible. Whether the deposit itself is an exchange depends on the receipt token: one-for-one receipts (aTokens) are generally deposits; tokens that represent a claim on a pool of different assets may be exchanges.
Yes, as ordinary income, but without a 1099-INT. You report it from your own records at the value when earned.
Source: Rev. Rul. 2023-14; IRS Notice 2014-21
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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