How The Ethereum Merge Could Affect Your Crypto Taxes

Sonar Official
2 min readSep 24, 2022

The Ethereum Merge marked the network’s long-awaited transition to Proof-of-Stake (PoS). This major event also triggered a hard fork of the Ethereum blockchain that aims to preserve its previous Proof-of-Work (PoW) consensus model.

With the blockchain splitting in two, new Ethereum Proof-of-Work chain coins (ETHW) have been distributed to eligible users on centralized exchanges that support the airdrop.

These include but are not limited to:

  • Binance
  • Crypto.com
  • FTX
  • Kraken
  • Huobi
  • ByBit
  • KuCoin
  • Gate.io

This means that, if you held ETH in your portfolio on any of these exchanges, you might now be the proud owner of an equivalent amount of ETHW! But don’t pop that champagne just yet or you might need to pour one out for your local tax authority.

In many jurisdictions around the world, this airdrop could be considered a taxable event. Additionally, if you sell your newly acquired ETHW tokens for a profit this could be subject to capital gains tax.

In order to save yourself some headaches later on, make sure you get familiar with how your specific jurisdiction taxes crypto.

We’ve prepared some useful resources for you:

Crypto Tax Free Countries 2022 | Koinly

Cryptocurrency Regulations Around the World | I ComplyAdvantage

If you can’t find your jurisdiction in the articles provided — or require more clarification — please consult your local tax authority or a professional accountant.

Sonar is building an all-in-one suite of cryptocurrency tools. We have plans to implement a comprehensive international crypto tax calculator. Subscribe to our newsletter on our website to stay up to date on all our future progress.

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