Is selling your BTC on coinbase pro a taxable event, even if you don't withdraw to your bank?

Let’s say I buy 1 BTC on Coinbase Pro for 20k. 6 months later I sell that BTC on Coinbase Pro for 40k, then the next day the price drops to 35k and I buy back in. Am I correct that I have created a taxable event and incurred a short term capital gain of 20k when I sold that bitcoin? This whole time I have thought I only incurred a gain when I sold the bitcoin then transferred the proceeds to my bank, but I’m now realizing that is probably wrong and when I sold (what I was thinking of as “converted”) the bitcoin on Coinbase Pro, I had a gain that I now have to pay taxes on.

Yes, anytime you sell a crypto asset whether for fiat or another crypto it is a taxable event. Assuming you are in the United States, I have no idea how the rest of the world looks treats it.


Unfortunately, yes if you’re in the US.

From the IRS:

A4. Yes. When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. For more information on capital assets, capital gains, and capital losses, see Publication 544, Sales and Other Dispositions of Assets.