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Tax by Transaction Type

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When Do Liquidity Mining Rewards Get Taxed — When You Receive Them or When You Sell Them?

The moment you receive a liquidity mining reward token, the tax obligation is already locked in — not the day you eventually sell it.
Samuel Lee · August 31, 2026
Depositing assets into a Liquidity Pool to participate in Liquidity Mining (often also called Yield Farming) typically earns you a share of the pool's trading fees, but many protocols also distribute their own Governance Token as an additional reward to encourage users to keep providing liquidity. How this "bonus reward Token" gets taxed is one of the areas beginners most often get confused...
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"The moment you receive a liquidity mining reward token, the tax obligation is already locked in — not the day you eventually sell it."
— CryptoTax Bible
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