- Short, plain-English explanations of the terms used on this site, grouped by topic.
- A definition here is general. How a term applies in a country, and the official source for it, is on that country’s page.
Many crypto rules use words that mean something specific in law or tax. This glossary explains them in plain English. It is general information, not legal or tax advice.
Regulation and licensing
MiCA (Markets in Crypto-Assets Regulation). The EU regulation (EU) 2023/1114 that sets one set of rules across the EU for issuing crypto-assets and for providing crypto-asset services. It applies in full since 30 December 2024. See EU rules.
CASP (crypto-asset service provider). A firm authorized under MiCA to provide services such as custody, exchange or operating a trading platform for crypto-assets.
Passporting. The right of a firm authorized in one EU country to serve customers in all other EU countries without a separate license in each.
Transition period (grandfathering). A temporary right for firms that already operated under national law to keep operating while they apply for a new license. Under MiCA it ended everywhere on 1 July 2026 at the latest.
Reverse solicitation. When a customer contacts a foreign provider on their own initiative. Under MiCA it is the only case in which a provider from outside the EU may serve an EU customer without authorization, and it is read strictly.
Crypto-asset white paper. The disclosure document an issuer or offeror of a crypto-asset must publish under MiCA. A regulator does not approve it.
Register of providers. The public list a regulator keeps of firms it has licensed or registered. Checking it before you use a provider is the simplest protection. Each country page names the register.
Spread. The difference between the price at which an exchange sells a coin to you and the price at which it buys it back. It is a cost on top of any fee, and is often hidden in the price of a simple “buy” button. See exchange fees in the Netherlands.
Maker and taker fees. On an exchange’s order book, a maker places an order that waits to be filled and a taker fills an existing order at once. Exchanges usually charge takers more than makers.
Money services business (MSB). In the United States and Canada, a business such as a crypto exchange that transmits money or value and must register with the national anti-money-laundering authority (FinCEN in the US, FINTRAC in Canada).
Self-regulatory organization (SRO). An industry body, recognized by a regulator, that supervises its members’ compliance with anti-money-laundering rules. Switzerland uses this model for many non-bank providers.
Financial free zone. An area with its own financial regulator and rules, separate from national financial regulation, such as the ADGM and DIFC in the United Arab Emirates.
Anti-money laundering
KYC (know your customer). The checks a provider must do to identify and verify its customers, such as asking for an ID document and an address.
Travel rule. The anti-money-laundering rule that a provider must send information about the sender and the recipient along with a crypto transfer. The thresholds differ by country.
AMLR and AMLA. The EU Anti-Money Laundering Regulation (EU) 2024/1624, which applies from 10 July 2027 and bans anonymous crypto accounts, and the EU Anti-Money Laundering Authority that coordinates national supervisors.
Privacy coin. A crypto-asset designed to hide the sender, the recipient or the amount of a transaction. EU law calls these anonymity-enhancing coins.
Tokens and stablecoins
Crypto-asset. A digital representation of value or rights that can be transferred and stored electronically using a distributed ledger or similar technology. Laws use different words for it: virtual asset, digital asset, digital token or cryptoasset.
Stablecoin. A crypto-asset designed to keep a stable value against a reference, usually a national currency.
E-money token (EMT). Under MiCA, a stablecoin that references a single official currency, such as the euro. Only banks and e-money institutions may issue it.
Asset-referenced token (ART). Under MiCA, a stablecoin that references another value or a basket of values, such as several currencies or commodities.
Payment, utility and asset tokens. A three-way split used by Swiss authorities: tokens meant as a means of payment, tokens that give access to a service, and tokens that represent rights against an issuer.
NFT (non-fungible token). A unique token that is not interchangeable with another one, often linked to digital art or collectibles. Tax rules for NFTs can differ from those for ordinary coins.
Airdrop. A distribution of tokens to wallet holders, usually free and often to promote a project.
Hard fork. A change to a blockchain’s rules that splits it in two, which can give existing holders a second, separate token.
Staking. Locking up tokens to help validate a proof-of-stake blockchain, in return for rewards. You can stake yourself or through a provider.
Mining. Using computing power to validate transactions on a proof-of-work blockchain such as Bitcoin, in return for newly created coins and fees.
Tax
Disposal (disposition). Any event that ends your ownership of an asset for tax purposes: selling it, swapping it for another crypto-asset, spending it or, in many countries, giving it away.
Capital gain. The profit when you dispose of an asset for more than it cost you. Many countries tax capital gains differently from income.
Cost basis (adjusted cost base). What you paid for an asset, plus certain costs, used to work out your gain or loss.
Holding period. The time between acquiring and disposing of an asset. In some countries it decides whether a gain is taxed at all (as in Germany and Portugal) or at which rate (as in the United States).
FIFO (first in, first out). A method that treats the units you acquired first as the ones you sold first.
Specific identification. Choosing which units you sell, so that their own cost and holding period are used.
Pooling. Treating all your tokens of one type as one pool with one average cost, as the United Kingdom does.
Inclusion rate. The share of a capital gain that is added to your taxable income. In Canada it is one-half.
Exemption limit versus allowance. Below an exemption limit (such as Germany’s Freigrenze) a gain is tax-free, but above it the whole amount is taxed. An allowance is always deducted, so only the part above it is taxed.
Badges of trade. The factors a tax authority weighs, such as how often you trade and how long you hold, to decide whether gains are business income or private investment.
Deemed disposition. A rule that treats you as having sold an asset at its market value although no sale happened, for example at death or when you leave a country.
Wealth tax. A yearly tax on the value of what you own rather than on gains. Switzerland levies one at cantonal level; the Dutch box 3 taxes an assumed return on wealth.
Box 3. The Dutch income tax category for savings and investments, including crypto, taxed on an assumed or actual return rather than on realized gains. See Netherlands: personal tax.
Negligible value claim. A UK claim that treats an asset that has become (almost) worthless as sold and immediately bought back, so that the loss can be used.
Reporting
CARF (Crypto-Asset Reporting Framework). The OECD standard under which crypto providers report their users’ transactions to tax authorities, which then exchange the data with other countries.
DAC8. Council Directive (EU) 2023/2226, the EU version of CARF. Providers collect data from 1 January 2026 for reports in 2027.
RCASP (reporting crypto-asset service provider). A provider that must collect and report user data under CARF or DAC8.
Form 1099-DA. The form US brokers use to report their customers’ digital asset sales to the IRS, from sales in 2025.
Tax identification number (TIN). The number your tax authority uses to identify you. Under CARF and DAC8 providers must ask for it.
Provisional assessment. A tax bill issued during or before the year, based on an estimate, so that you pay in installments; the final bill follows after you file. In the Netherlands it is the voorlopige aanslag.
Voluntary disclosure. Correcting a return or reporting undeclared income or assets on your own initiative, before the tax authority finds out. The tax and interest are still due, but the penalty can be lower. In the Netherlands it is called inkeer; see penalties and voluntary disclosure.
Wallets and custody
Custody (custodial wallet). A provider holds the private keys for you. You depend on the provider to give you access.
Self-custody (self-hosted or unhosted wallet). You hold the private keys yourself, in software or on a hardware device. Nobody can freeze your coins, but nobody can recover them for you either.
Private key. The secret that gives control over the crypto at an address. Whoever has it can move the coins.
Seed phrase (recovery phrase). A list of usually 12 or 24 words from which a wallet’s private keys can be restored. It must be kept as safely as the coins themselves.
Hardware wallet. A small device that stores private keys offline and signs transactions without exposing the keys to your computer.
Multisig (multi-signature) wallet. A wallet that needs several keys, for example two of three, to approve a transaction, so that one lost or stolen key is not fatal. This comparison of multisig and single-signature wallets explains when it is worth the extra effort.
Death and estates
Crypto inheritance plan. The arrangements that let your heirs find and access your crypto after your death, without exposing it while you are alive. This guide to planning a crypto inheritance covers the practical steps.
Digital estate. Everything you own or control online: accounts, files, domains, passwords and digital assets, including crypto. This explanation of what a digital estate is covers the wider picture.
Sources
Definitions follow the official texts below and the official sources on each country page.
- EUR-Lex: Regulation (EU) 2023/1114 (MiCA) (last checked October 2026)
- EUR-Lex: Regulation (EU) 2023/1113 (transfers of funds and crypto-assets) (last checked October 2026)
- EUR-Lex: Regulation (EU) 2024/1624 (Anti-Money Laundering Regulation) (last checked October 2026)
- European Commission: DAC8 (last checked October 2026)
- OECD: Crypto-Asset Reporting Framework (last checked October 2026)
This page is general information, not legal or tax advice.