TL;DR:
- A token launch moves tokens out of the treasury in several ways: a sale to investors, grants to the team, payments to KOLs and contractors, airdrops to users. For tax purposes each of those transfers is a separate event, and most of them are income for whoever receives the tokens.
- The catch is that some of the issuer's own questions are still open. There is no IRS guidance on when a project is taxed on its token sale proceeds, and Singapore and Switzerland answer that question in different ways.
- What is settled reaches further than most teams expect. Tokens paid for work are taxed at their value on the day they're received, an employer withholds in cash, and from 2026 the US reporting threshold for contractors is $2,000.
- Tax authorities are also starting to receive the data. Since January 2026, exchanges and other crypto platforms in the EU and the UK collect their users' transaction data for tax reporting, and US brokers already report sales on a new form, the 1099-DA.
- The guide below walks through what happens at each moment of a launch, the points advisers usually check and the records teams keep, without recommending a structure.
Most crypto tax content is written for traders: what happens when you sell, swap or stake. A project launching a token sits on the other side of almost every one of those transactions. It pays the team in tokens, sends the airdrop and hands a KOL an allocation, and from 2026 more of those flows reach tax authorities automatically. As of September 2026, 77 jurisdictions have committed to the OECD's Crypto-Asset Reporting Framework (CARF), the standard that makes crypto platforms report what their users do.
Most of a launch's tax questions are decided before the TGE, by how tokens leave the treasury and on what terms. This guide is for founders and finance leads preparing a token generation event (TGE), the day a token is created and first distributed. It covers the sale, team tokens, tokens paid out as marketing, the 2026 reporting regimes, DAOs and treasuries, and ends with what happens from the raise to each year-end. It describes the rules and the open questions without recommending a structure, and it isn't tax advice: that is a question for a qualified adviser in each jurisdiction involved.
Token issuer tax starts with how tokens leave the treasury
Crypto tax for a token issuer is the set of tax and reporting obligations that come from creating a token and distributing it: selling it to investors, paying people with it and giving it away. In the US the starting point is that the IRS treats crypto as property, not currency, so every transfer is measured at its US dollar value on the day it happens.
Minting is a different matter. No IRS ruling says that creating your own token is income, and a panel at San José State University's 2026 Blockchain Tax Conference listed "tokens treated as income because they are liquid" among the mistakes issuers make. The obligations come from what the tokens are used for, which is why one launch can involve five different treatments:
| How tokens leave the treasury | What it usually means for the recipient | What the issuer has to work out |
|---|---|---|
| Sale to investors (SAFT, presale, public sale) | A purchase: the price paid is their cost basis | When the proceeds count as income (unsettled in the US) |
| Grants to team and advisers | Income when the tokens vest | Withholding, payroll reporting, vesting terms |
| Payments to KOLs and contractors | Income at the token's value on the day received | Information returns for US payees above the threshold |
| Airdrops and quest rewards | Often income, depending on the country and on whether a service was expected | Little official guidance on the issuer's side |
| Treasury sales and swaps | Not applicable | Gain or loss on its own tokens, when their cost basis is unclear |
The sale comes first on the calendar, and it is also the least settled of the five.
The token sale is the least settled part of issuer tax
Most projects sell tokens before the TGE, often through a SAFT (simple agreement for future tokens), in which investors pay now for tokens delivered later. The SJSU panel, which included Sean McElroy, a partner at the law firm Fenwick, put the starting point plainly: "SAFTs are sales of property, and are not sales of stock." That means Section 1032, the rule that lets a company issue its own shares without tax, doesn't apply to tokens.
If the SAFT is treated as a forward contract, the panel said, the company is taxed when it delivers the tokens after the TGE. Then it asked the question nobody in the US has answered with authority: "What about the issuer side? Timing for income recognition?" Practitioners also argue for current-sale income, deferred revenue or even debt treatment. Other countries have written an answer down, and the answers differ:
- United States (practitioner view): a sale of property, taxed at delivery if structured as a forward. There is no IRS guidance, so the other theories remain in play.
- Singapore (IRAS): proceeds from utility tokens are "generally regarded as deferred revenue", proceeds from security tokens are capital and not taxable, and amounts refunded after a failed sale aren't taxed.
- Switzerland (ESTV): the federal tax administration's 2021 working paper treats utility token proceeds as taxable income at issuance, offset by a provision for documented project obligations that is released once the network is live.
The contract and the jurisdiction decide which of these applies, which is why the raise documents and the tax analysis are usually reviewed together. Our guide to SAFT vs SAFE vs token warrants explains how each instrument works and what it puts on the unlock calendar, the public schedule of when each group of holders can sell.
Team tokens can create a tax bill before anyone can sell
Tokens granted to founders, employees and advisers are compensation. In the US, Section 83 decides when they're taxed: the first moment they are either vested (no longer at risk of being forfeited) or transferable. The SJSU panel flagged the distinction that catches teams out, "vesting of tokens v. lockup of tokens", because the two lead to different results. A token that has vested but is still locked can be taxable at its vesting-date value, even though its holder can't sell it to pay the bill.
The structure of the grant changes the timing. An 83(b) election, filed within 30 days of the grant, moves the tax to the grant date, when the token may be worth little. Restricted token units (RTUs), a promise to deliver tokens later, can't use that election. Lowenstein Sandler, a US law firm, wrote that RTUs should stay outside Section 409A, the deferred-compensation rules, if the tokens are delivered by March 15 of the year after vesting, while token options probably fall under them. The same grant is then handled differently depending on where the team member works:
- United States: tokens paid as wages are subject to income tax withholding, FICA and FUTA and go on Form W-2, according to IRS Notice 2014-21, and the withholding is paid to the IRS in cash.
- United Kingdom: HMRC considers exchange tokens generally readily convertible assets, so the employer runs PAYE and Class 1 National Insurance on their estimated value and owes it even if it can't recover it from the employee.
- Singapore: under the IRAS e-Tax Guide, founder tokens paid for services with a lock-in period are taxed when the lock-in ends, at the token's value then.
In the US and the UK, the employer's withholding is due in cash whether or not the tokens can be sold yet.
Tokens paid as marketing are compensation, not budget
Launch plans usually list airdrops, KOL allocations, quest rewards and ambassador programs as marketing spend. For tax, most of them are payments to people. The IRS says anyone who receives crypto for services has income equal to its fair market value in dollars when it's received, and a business paying a US contractor in tokens reports that value on an information return. From payments made in 2026, the threshold for that return is $2,000 instead of $600.
Each kind of payout fits that rule a little differently:
- KOL and creator deals: tokens given to promote a launch are pay for services, valued in dollars on the day they're delivered. Payments to non-US creators follow separate US withholding and reporting rules.
- Ambassador and community rewards: recurring token payments for moderating, creating content or running events are also pay for services, so the threshold applies to what each person receives over the year.
- Airdrops: the IRS's only airdrop ruling, Revenue Ruling 2019-24, covers tokens received after a hard fork, not a project's promotional drop. HMRC's manual says airdrops "provided in return for, or in expectation of, a service are subject to Income Tax".
- Quests and points: whether completing a task counts as a service hasn't been addressed in IRS or HMRC guidance, so these rewards sit between the airdrop and the paid-work cases.
When we plan a launch, the airdrop and KOL allocations sit in the token plan, not only in the marketing budget. The token side of our go-to-market work covers points and airdrop mechanics and the sell pressure those distributions create, and the same allocations are what a tax adviser asks about: who receives tokens, when, in exchange for what, and where they live. Our guides to airdrop marketing and briefing a KOL cover the marketing side of each.
From 2026, tax authorities can see where launch tokens go
Until recently, most token flows reached tax authorities only if the holder reported them. Three regimes are changing that. In the US, custodial brokers report digital asset sales on Form 1099-DA: gross proceeds for sales from January 1, 2025, and cost basis only for tokens acquired after 2025 and held in the same account. Congress repealed a separate rule for DeFi front-ends in April 2025, so US reporting sits with custodial platforms.
CARF works the same way on a global scale, with crypto service providers reporting on their users. Its commentary says that "the sole creation and issuance" of a token doesn't make an issuer a reporter, while buying tokens from an issuer to resell and distribute them does, which can bring launchpads and distributors into scope. Whether a project running its own public sale is caught depends on how the sale is run, and the OECD text doesn't address it directly. Here is how the main issuer jurisdictions compare:
| Jurisdiction | Corporate tax headline | Tokens received for work | Crypto reporting | Source |
|---|---|---|---|---|
| United States | 21% federal, plus state taxes | Ordinary income at value received; wages withheld and reported on Form W-2 | Form 1099-DA: proceeds from 2025, basis from 2026; CARF exchanges by 2029 | IRS |
| European Union | Set by each member state | Set by each member state | DAC8 applies from January 1, 2026; first exchanges by September 30, 2027 | European Commission |
| United Kingdom | 25% main rate (19% small profits) | Income Tax and National Insurance, usually through PAYE | CARF from January 1, 2026, including UK residents; first report by May 31, 2027 | HMRC |
| Switzerland | 8.5% federal profit tax (4.25% for foundations), plus cantonal tax | Wages in payment tokens are taxable employment income | CARF enacted but not applied in 2026; exchanges by 2028 on the OECD list | ESTV, SIF |
| Singapore | 17% | Founder tokens taxed when any lock-in ends | CARF from January 1, 2027; first report by May 31, 2028 | IRAS |
| UAE | 9% above AED 375,000; 0% on qualifying free zone income | No token-specific guidance from the Federal Tax Authority | CARF exchanges by 2028; crypto transfers exempt from VAT | FTA, OECD |
| Cayman Islands | No corporate income tax | No income tax | CARF from January 1, 2026; first reports and exchanges in 2027 | Cayman Tax Information Authority |
For an issuer the effect is indirect but real: team members, KOLs and holders who sell through a reporting platform now generate records that tax authorities receive automatically.
For DAOs and foundations, the entity question comes before the tax one
Many projects issue tokens through a foundation or a DAO instead of the development company. A DAO without a legal wrapper carries a risk the others don't: US courts have accepted, at the early motion-to-dismiss stage, that its members could be treated as a general partnership. That happened with bZx DAO in 2023 and with Lido DAO in November 2024, where the judge found a partnership plausibly alleged under California law. These were liability cases, not tax rulings, but a partnership comes with its own filing questions.
Legal wrappers answer some of those questions and leave others open:
- Wyoming DUNA: a decentralized unincorporated nonprofit association, available since July 1, 2024. The statute doesn't set federal tax classification, and "nonprofit" under state law doesn't mean tax-exempt.
- Uniswap's DUNI: the DUNA formed for Uniswap governance reports that it has "initiated proceedings to attain corporate tax treatment" back to 2020 and hasn't elected tax-exempt status. That is its own position, not an IRS ruling.
- Foundations: the Swiss tax administration notes that utility tokens are mostly issued by foundations, which pay federal profit tax at 4.25% instead of the 8.5% that applies to companies.
The treasury raises a last set of questions. There is no authority on whether holding your own token is income, and the cost basis of self-minted tokens is unaddressed, which matters the first time the treasury sells tokens for stablecoins to fund operations. Stablecoins are still property for tax purposes: the GENIUS Act of July 2025 created a federal framework for issuers but, as Accounting Today reported, left the tax questions open.
A launch creates tax events long before the token trades
Put together, the rules above describe a launch that creates tax events at several moments, not only on the day the token trades. This walk-through describes rather than prescribes, since the right structure depends on the jurisdictions and contracts involved. It starts before the raise, when the issuing entity and its jurisdiction are set and the first tokens are sold through SAFTs or token warrants. Advisers usually check how sale proceeds are treated where the issuer sits (deferred revenue in Singapore, income at issuance in Switzerland, unsettled in the US), and teams typically keep the signed contracts, the amounts received and the token price implied by each round.
At the TGE, tokens are minted, sale tokens are delivered and the first airdrop and KOL allocations go out. The points advisers usually look at are the valuation used for tokens delivered as pay, and whether a launchpad or distributor reselling the token reports under CARF or DAC8. The record most teams keep from that day is a list per recipient with wallet, date, amount and dollar value.
That day carries the most weight. The token's day-one value becomes the reference for most payouts that follow, and Lowenstein notes that token valuations stay reliable for "a much shorter period of time (such as two weeks)" than the valuations used for stock grants. Our TGE guide covers the other decisions to close before that day.
In the first year after launch, team grants vest, contributors and ambassadors are paid, and the treasury starts selling or swapping tokens. The points usually checked are cash for employee withholding, 83(b) deadlines (30 days from grant) and the $2,000 threshold for US contractors. The records that typically follow are the vesting schedule, payroll entries and cost basis tracked wallet by wallet.
By year-end, much of that activity is already in front of tax authorities.
Every year-end, 1099-DA, CARF and DAC8 reports reach tax authorities, and information returns go to contractors. Advisers usually check that what recipients were told matches what was paid, and the status of pending legislation in each jurisdiction. The record that ties the year together is an annual reconciliation of the treasury and of every outflow.
Tax dates belong on the launch calendar
Those moments make up a tax calendar, and most of its dates are launch dates too: the TGE, the first airdrop, the end of the team's cliff, the start of the KOL campaign. That is where a launch plan and a tax review meet. Our guide to tokenomics for founders explains how unlocks move price, and the 90-day pre-TGE playbook sets the marketing timeline around them.
We've worked with more than 300 crypto projects since 2019, including layer-1 teams like Supra, which came to us before its TGE to bring creators into its product launch (Lunar Strategy, 2025). Our go-to-market team builds the narrative, KOL and airdrop plan around the dates your contracts and advisers set. We don't give tax advice; we plan the launch inside the structure you choose.
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Frequently Asked Questions
Is minting a token a taxable event for the issuer?
No IRS ruling or court decision says that creating your own token is income, and practitioners treat the question as unsettled. The general view is that tax arises when the tokens are sold, distributed or used to pay someone, not when they're created. The issuer's cost basis in tokens it minted itself is also unaddressed, which matters when the treasury later sells them.
Does a project receive a Form 1099-DA?
Brokers send Form 1099-DA to customers who sell digital assets through custodial accounts, and issuing a token doesn't make a project a broker. A project that sells treasury tokens through an exchange account would receive one like any other customer. Cost basis appears only for tokens acquired after 2025 in that same account, so tokens minted elsewhere and moved in show proceeds without basis.
What is CARF?
The Crypto-Asset Reporting Framework is an OECD standard under which crypto service providers collect each user's tax residence and report their transactions to the local tax authority, which shares the data with partner countries. The first exchanges happen in 2027 for most committed jurisdictions, including the UK and the Cayman Islands, and in 2029 for the United States, according to the OECD's September 2026 list.
Did Trump remove capital gains tax on crypto?
No. Fact-checkers at Full Fact found no such executive order in January 2025, and the One Big Beautiful Bill Act of July 2025 didn't change capital gains rates. In September 2026 a House committee approved the proposed Digital Asset Tax Certainty Act (H.R. 10357) by 38 votes to 5, but it isn't law yet.
Are staking rewards in a project treasury taxable?
In the US, yes, under current guidance. Revenue Ruling 2023-14 taxes rewards when the holder gains control of them, and in June 2026 the Tax Court held in Paschall v. Commissioner that staking rewards are income when credited, without relying on that ruling. The earlier Jarrett case ended as moot, not as a win for stakers.
Does a stablecoin de minimis rule mean small stablecoin sales are tax-free?
No. The 1099-DA instructions let brokers skip reporting a customer's qualifying stablecoin sales when they total $10,000 or less in a year, but that is a reporting rule for brokers. Any gain on those sales is still taxable, and the GENIUS Act didn't change how stablecoins are taxed.
