Crypto Lending Tax Treatment Guide for Interest Income (2026)
Understand crypto lending tax treatment: interest income recognition, collateral taxation, platform risks, and reporting for DeFi and centralized lending.
Summary
Crypto lending generates taxable interest income. This guide explains income recognition timing, collateral treatment, and reporting for lending platforms.
Key Steps
- 1Track interest earned: FMV of tokens received as interest is ordinary income.
- 2Document collateral: collateral lock/unlock not taxable unless liquidation.
- 3Report on Schedule 1: lending interest as miscellaneous income.
- 4Track platform risk: Celsius, BlockFi bankruptcy impacted tax treatment.
- 5Maintain transaction logs: deposit date, collateral amount, interest received.