Trent Nydegger breaks down U.S. crypto tax rules

One of Trent Nydegger’s clients received a six-figure refund – not by finding a loophole, but by cleaning up years of messy crypto transaction records. And this experience is more common than investors may realize.

Nydegger, president of MoonTax – the company behind the CPAI platform – told The Crypto Radio that crypto taxes aren’t confusing because of the rules, but because the data is a mess. “You don’t have a tax problem. You have a data problem,” he said.

From crypto curious to crypto founder

Nydegger’s introduction to the world of cryptocurrency came during the industry’s early years of public interest. “I got crypto curious probably back in 2017-2018,” he said. “I had heard about Bitcoin, and I started looking deeper into decentralization and the potentials of blockchain.”

At the time, he was one of many newcomers experimenting with digital assets. Like others, he learned by doing. “The typical story of most people in crypto is you go and you try and invest a bunch of money and you lose it,” he said. The trial-and-error nature of those early steps left a lasting impression.

That process led Nydegger to a deeper understanding of how cryptocurrencies work – and the challenges they pose, especially when it came to tracking transactions. He noted, “You have to be curious in this industry. There’s not really a school for this kind of stuff.” It’s that curiosity and problem-solving mindset that ultimately led to the creation of CPAI.

Fixing the real problem: data

From left, MoonTax President Trent Nydegger joins The Crypto Professor to discuss how poor data – not complex rules – derails crypto tax filings.

For most crypto users, filing taxes is about more than checking a box. It requires navigating complex records from different wallets, exchanges, and blockchains – each with their own formats and quirks.

According to Nydegger, the confusion starts not with the taxes themselves, but with the underlying transaction data. “We want people to understand why they're getting taxed,” he explained.

“Blockchain is a structured data set. It's a perfect playground for AI,” Nydegger said. His company leverages artificial intelligence to clean and sort transaction histories so users can submit accurate tax filings. The tech automatically interprets a wide variety of transaction types, reducing human error and manual effort.

Nydegger emphasized the limitations of traditional tax tools. Many existing platforms were not built with crypto in mind, and now struggle to keep up.

“Tech debt” – old code being repurposed to support new blockchain functionality – has become a common problem. In contrast, platforms like his, CPAI, were built specifically for crypto, giving them more flexibility and adaptability from the start.

Beyond just calculating tax liability, CPAI offers legal services, data reconciliation, and educational tools. One feature allows users to double-check their transaction records. “If you're struggling with transactions that don't look right, you can check that on our app,” Nydegger said. The goal is to make it easier for users to check and correct their transaction data.

Understanding how the IRS sees crypto

In the US, how crypto is classified has major tax implications. “Currently, for now, crypto is legally considered property here in the United States,” Nydegger noted. This means that selling, trading, or converting crypto – even into another token – can create a taxable event.

That complexity catches many people off guard. “The IRS wants to tax you anytime you go from east to west,” he said. The metaphor illustrates how even a simple swap between cryptocurrencies can lead to unexpected tax obligations.

Unlike fiat currencies, which are typically exempt from capital gains tax when exchanged, crypto trades are taxable under current IRS rules.

With new investors entering the space each year, confusion about reporting rules remains common. For those unsure how to proceed, Nydegger and his team offer hands-on support. Users can access a transaction checker and other features to assess potential tax implications.

“There are two rules that we tell people: First, don't go to prison. Second, pay the government as little money as possible – legally.” It’s a simple mantra, but one that reflects the seriousness of compliance and the importance of informed reporting.

A more grounded approach

While CPAI relies on automation to handle complexity, Nydegger said maintaining balance is just as important. “When I go home, I don't take my computer home,” he said. “It's really about presence.”

That same mindset, he said, extends to how the company engages with users. Many approach crypto taxes with uncertainty –often because they don’t fully understand how their activity is taxed. “If there’s one thing that’s certain in life, it’s death and taxes,” he said. For Nydegger, education plays a key role in helping people work through that uncertainty.

By addressing the root problem – data quality – and building tools to make crypto tax reporting more transparent, CPAI is helping people take back control. For the estimated 52 million crypto users in the U.S., according to Coinbase, that support could make a major difference.

Listen to the whole interview on The Crypto Radio's live player or the Token Files podcast.

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