# Crypto Loans Investors with a large holding of crypto assets may wish to take a loan against their portfolio to unlock some of their wealth. In this scenario they may wish to avoid disposal of an asset to avoid a taxable event. Instead of selling their assets, it's possible to use crypto assets as collateral to take out a loan thereby avoiding selling the underlying assets. ### Are crypto loans taxable? Loans have long been considered non-taxable by the IRS. It’s reasonable to assume that cryptocurrency loans will be treated the same way. ### Things to watch out for Some decentralized protocols use crypto-to-crypto swaps to facilitate loans. For example, if you use BTC as collateral on a platform, you might be given pBTC in return. Swaps typically generate a taxable event and given the lack of explicit guidance from the IRS, this may be considered a swap rather than a loan. How you chose to report this type of loan will depend on if you want to take an aggressive stance or a more conservative approach to your tax position. A conservative view would treat the loan as a swap for a new token and as such treat this as a disposal and then capital gains or losses depending on how the value of the asset has changed. An aggressive approach would treat this entirely as a loan, treating the new token as a 'claim ticket' and avoid declaring anything to the IRS. In either case, it's always advisable to consult a CPA with these more complex types of trades. ### Are crypto loan interest payments considered tax-deductible? Whilst there has been no official guidance, we can assume that interest on crypto loans will be treated in a similar way to normal loans by the IRS and as such they should be tax-deductible for business expenses. Typically, interest on personal loans (for car payments, groceries or other general living expenses) is not tax deductible. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.recap.io/us-tax-guide-for-individuals/transaction-types/crypto-loans.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.