Crypto Cost Basis Methods 2026: The Jurisdiction Decides

Ask ten crypto investors which cost-basis method they use and most will say "whichever pays the least tax." Outside the US, that instinct is usually wrong. Your country's tax code fixes the method you must apply, and using the wrong one — FIFO where pooling is required, a global average where per-wallet tracking is mandated — produces a return that won't reconcile with what the tax authority expects. This guide maps the method each major jurisdiction actually requires in 2026, then uses a single worked example to show why the same disposal can produce four different gains depending on the rule that governs it.

The short answer

Cost-basis method is set by your jurisdiction, not chosen to minimise tax:

• US (Rev. Proc. 2024-28): per-wallet tracking since 1 Jan 2025; FIFO by default, or Specific Identification made at or before the sale. No separately blessed LIFO or HIFO.
• UK: same-day matching, then the 30-day rule, then the Section 104 average-cost pool. Not FIFO.
• Germany: FIFO, with gains tax-free after a one-year holding period.
• Canada: adjusted cost base (a weighted average), plus the superficial-loss rule.
• France: the article 150 VH bis proportional portfolio formula (see the French calculation). Not FIFO.

Same trades, a different method, a different taxable gain — so set any tool to the method your country mandates, never a global default.

Why the method moves the number

Cost basis decides which acquisition cost offsets a sale. In a rising market:

• FIFO matches the oldest, cheapest lot → larger gain.
• Higher-cost-lot matching → smaller gain.
• Average / pooling → a smoothed middle.

Identical proceeds, identical trades, different method, different tax. That sensitivity is exactly why tax authorities fix the method instead of leaving it to the taxpayer (see FIFO vs LIFO vs HIFO).

The jurisdiction matrix

The structural point: FIFO is not universal. Pooling (UK), average cost (Canada), and a proportional portfolio formula (France) are not FIFO, and applying FIFO there produces the wrong gain.

The recurring errors

• "I'll use HIFO to minimise tax" — only valid where Specific Identification is permitted and documented; it is not a globally available method.
• US universal cost basis after 2025 — no longer allowed; basis is per wallet/account (see the per-wallet rule).
• FIFO for a UK/French resident — wrong framework; pooling / 150 VH bis applies.
• One global tool default for a multi-country situation — the method must match each person's jurisdiction.

Practical guidance

1. Identify your jurisdiction's mandated method first — do not start from "what saves tax".
2. US from 2025: track per wallet/account; FIFO or documented Specific ID only.
3. UK: apply same-day, then 30-day, then the Section 104 pool — in that order.
4. Germany: FIFO with the one-year holding test; Canada: ACB with the superficial-loss rule.
5. France: the 150 VH bis portfolio formula at the foyer level — not FIFO.
6. Set your tool to the correct jurisdiction method and keep the supporting records.

Choosing and configuring a tax tool

Most crypto-tax tools — Koinly, CoinTracker and others — can compute several jurisdiction methods, but they ship with a global default that often won't match your country. Before you trust a number, open the settings and confirm the tool is configured for:

• per-wallet FIFO or Specific Identification if you file in the US (the pre-2025 universal/aggregate setting is no longer compliant);
• Section 104 pooling for the UK;
• FIFO with the one-year holding test for Germany;
• adjusted cost base for Canada;
• the 150 VH bis portfolio calculation for France.

A tool left on its default can produce a non-compliant gain that looks perfectly plausible right up until an audit asks how it was derived.

Worked example: the same disposal, four jurisdictions, four different gains

To make the method sensitivity concrete, consider a taxpayer who purchased 2 BTC in two lots:

• Lot A: 1 BTC acquired at $20,000 (18 months ago)
• Lot B: 1 BTC acquired at $45,000 (4 months ago)
• Disposal: sells 1 BTC for $50,000 proceeds today

US (FIFO, per-wallet): FIFO matches the oldest lot — Lot A at $20,000. Gain = $50,000 − $20,000 = $30,000. Holding period > 12 months → long-term capital gain rate applies.

US (Specific Identification, HIFO-style): If the taxpayer identified Lot B at or before the sale with adequate records, the matched lot is $45,000. Gain = $50,000 − $45,000 = $5,000. Holding period < 12 months → short-term rate, typically higher. The lower gain trades away the preferential rate.

Germany (FIFO, >1-year holding): Germany also applies FIFO: Lot A ($20,000) is matched. Gain = $30,000. But because Lot A has been held over one year, the gain is tax-free under German law. Lot B's shorter holding period would be taxable.

UK (Section 104 pool): The UK does not select individual lots. Instead, both lots are pooled: total acquisition cost = $65,000 for 2 BTC, pool average = $32,500 per BTC. On disposal of 1 BTC: gain = $50,000 − $32,500 = $17,500.

France (150 VH bis): The 150 VH bis formula considers the entire portfolio. If the taxpayer's total portfolio acquisition cost is €90,000 and the total portfolio value at disposal is €120,000 (with the 1 BTC disposal representing €50,000 of the total value), the formula calculates gain proportionally as: proceeds × (1 − total acquisition cost / total portfolio value at time of sale). The figure depends on the whole portfolio context, not the individual lot.

The arithmetic is identical; the method determines the matching and therefore the taxable amount. In the US, the same person's same disposal produces either $30,000 or $5,000 depending on whether they documented a valid specific identification. In Germany, the same gain is zero if the holding period threshold is met.

This is why jurisdiction-specific compliance matters: applying the wrong country's method to the right numbers still produces a wrong return.

How Wag3s applies this automatically

Wag3s Folio applies the rule that matches your residency rather than a single global default — per-wallet FIFO or Specific ID for US filers under Rev. Proc. 2024-28, Section 104 pooling for the UK, FIFO plus the one-year clock for Germany, ACB for Canada, and the 150 VH bis portfolio formula for France — and keeps the lot-level records each method needs to be defensible. For company books, Wag3s Ledger carries the same logic into the general ledger. Wag3s produces the figures and the audit trail; it's built to support a qualified tax adviser's review, not replace it.

Further reading

• How to Do Crypto Taxes
• FIFO vs LIFO vs HIFO for Crypto
• US Crypto Per-Wallet Cost Basis (2025)
• Realized vs Unrealized Gains in Crypto
• Crypto Capital Gains Calculation France (150 VH bis)
• Crypto Tax-Loss Harvesting

Sources

• IRS — Rev. Proc. 2024-28 (per-wallet/account basis from 1 January 2025; FIFO or Specific Identification), and the Digital assets hub.
• HMRC — Cryptoassets Manual CRYPTO22200: same-day rule, 30-day rule, and the Section 104 pool (TCGA 1992 s.104).
• Germany — § 23 EStG: private sale transactions and the one-year holding period.
• Canada — CRA, Reporting income from crypto-asset transactions: adjusted cost base and the superficial-loss rule.
• France — Article 150 VH bis (Légifrance) and BOFiP BOI-RPPM-PVBMC-30-10 on the occasional disposal of digital assets.