Glossary - The Crypto Economy

A

ACH transfer: An ACH transfer is an electronic payment between US bank or credit union accounts over the Automated Clearing House network, the system behind direct deposit, bill pay and the free bank-transfer option at exchanges such as Kraken. Payments move in batches that settle a few times each business day, so an ACH transfer is often free at an exchange but rarely instant.
Address poisoning: Address poisoning is a scam in which an attacker plants a lookalike address in your transaction history, usually through a tiny or zero-value transfer, hoping you will copy it the next time you send money. The fake matches the first and last characters of an address you really use, so a glance at the shortened version a wallet displays misses the swap.
Anti-money laundering (AML): Anti-money laundering, or AML, means the rules that turn banks and exchanges into the first line of defense against dirty money, so they have to know each customer, follow the payments and tell the authorities when something looks wrong. If an exchange holds a transfer and asks where your funds came from, you are seeing AML at work.
Asset-referenced token: An asset-referenced token, or ART, is the EU's legal name for a crypto token that tries to keep a stable value by tracking something other than a single official currency, such as a basket of currencies or a mix of other assets. Under MiCA, its issuer must be authorized by a national regulator, or be a bank, before offering it to the public in the EU.

B

Backup withholding: If a Form 1099 shows federal income tax withheld that you didn't expect, that is usually backup withholding, where the payer kept 24% of a payment for the IRS. It happens when your taxpayer number was missing or wrong, or after the IRS flagged under-reported interest or dividends.

C

Chargeback: A chargeback is the reversal of a card payment, in which the card issuer takes the money back from the merchant's bank after the cardholder disputes the charge. Crypto transfers have no such mechanism, so a sender usually gets money back only if the recipient chooses to return it.
Cost basis: Cost basis is what you paid for an asset, including expenses connected with the purchase such as fees. When you sell, the difference between what you receive and your basis is your taxable gain or loss.
Crypto-asset service provider: A crypto-asset service provider, or CASP, is a firm allowed under the EU's MiCA regulation to offer crypto services to clients, such as running a trading platform, holding coins in custody or transferring them for a client. A firm either gets a MiCA license from its national regulator or, if it is already a bank, investment firm or similar regulated company, notifies its supervisor instead.
Crypto-asset white paper: A crypto-asset white paper is the disclosure document that the EU's MiCA regulation requires before a token is offered to the public or admitted to trading, describing who is behind it, what rights holders get, the technology and the risks. National regulators receive it in advance but do not approve it, except for asset-referenced tokens, whose white paper counts as approved once the issuer is authorized.

D

Depeg: A depeg is when a stablecoin trades away from the value it is meant to hold, for example a dollar token changing hands at 95 cents. It happens on exchanges and trading pools, where most holders buy and sell, and the market price can differ from what the issuer pays the customers who redeem with it directly.
Deposit confirmations: Deposit confirmations are the number of blocks an exchange waits for, counting the block that first includes your transfer, before it credits incoming crypto to your account. Each exchange sets its own count for each network, so the same coin can be ready to trade within seconds at one platform and only after many minutes at another.

E

E-money token: An e-money token, or EMT, is the EU's legal name for a crypto token that aims to keep a stable value by tracking one official currency, such as the euro or the US dollar. MiCA treats it as electronic money, so the issuer generally has to be a bank or an authorized electronic money institution, and holders can redeem it from the issuer at face value at any time.

F

FX spread: An FX spread is the gap between the exchange rate a provider gives you and the mid-market rate, the point halfway between what buyers bid and sellers ask for a currency. Providers often take their margin through that gap instead of, or on top of, a visible fee, so a conversion can cost money even when the fee line reads zero.

G

Gas fee: A gas fee is what you pay, in ether, to get a transaction processed on Ethereum, worked out as the amount of gas the transaction uses times the price of each unit. The network sets a base price that moves with demand, and the sender can add a tip to be included sooner.
GENIUS Act: The GENIUS Act is the US federal law, signed on July 18, 2025, that sets the rules for payment stablecoins, covering who may issue them, what reserves must back them and how holders get their money back. It takes effect on January 18, 2027, and from July 18, 2028 US crypto platforms may no longer offer or sell payment stablecoins that a permitted issuer did not issue, apart from exceptions written into the Act.

H

Hardware wallet: A hardware wallet is a small device that creates and keeps the private keys to your crypto and signs each transaction inside itself, so the keys never reach the phone or computer it connects to. The coins stay on the blockchain, and the device's own screen is where the owner checks and approves every transfer.

K

KYC: KYC, or know your customer, covers the passport upload and address check you go through when you join an exchange or open a bank account. The firm has to confirm your name, date of birth, address and ID number so it knows who is behind each account.

M

Maker-taker fees: When you trade on an exchange's order book, you pay the maker fee if your order waits on the book until someone else fills it, and the taker fee if it fills at once against orders already there. Takers usually pay more, because makers supply the orders that everyone else trades against.
MiCA: MiCA is the European Union's Markets in Crypto-Assets Regulation, the law that sets common rules for issuing crypto tokens, stablecoins included, and for the firms that provide crypto services to clients. It applies directly in every member state, with the stablecoin rules in force since June 30, 2024 and the rest since December 30, 2024.
Multisig: A multisig wallet needs signatures from several separate keys before it can move funds, with the number set in advance as a threshold such as 2 of 3. One stolen key is then not enough to spend, and one lost key does not lock the money as long as the other signers can still reach the threshold.

O

Off-ramp: An off-ramp is a service that turns crypto back into ordinary money and pays it out, usually to a bank account and sometimes as cash. Exchanges and crypto ATMs are the common off-ramps, and what you pay depends mostly on how the money reaches you.
On-ramp: An on-ramp is a service that turns ordinary money, such as dollars on a debit card or euros in a bank account, into crypto. Exchanges, payment apps and crypto ATMs all work as on-ramps, and each one charges for the conversion in its own way.

P

Private key: A private key is a secret number, and the crypto address you share with others is computed from it by math that can't be run in reverse. Whoever knows the number can sign transactions and spend from that address, and there is no reset, because a key can't be changed once it exists.
Proof of reserves: Proof of reserves is a check, usually run by a crypto exchange with an outside firm, showing that wallets the exchange controls held at least as much of each covered coin as its customers' balances added up to at one moment. Customers can confirm that their own balance was counted by finding it in a cryptographic list of all balances called a Merkle tree.

R

Reserve attestation: A reserve attestation is a report in which an outside accounting firm gives its opinion on a stablecoin issuer's claim that the assets backing its tokens are worth at least as much as the tokens in circulation. The firm tests that claim on one or two named dates, so the report is narrower than an audit of the company's full accounts.

S

Seed phrase: A seed phrase is a list of 12 to 24 ordinary words that a crypto wallet creates when you set it up, and from which it can rebuild every key the wallet holds. Anyone who has the words can move the funds, so it is the one thing a wallet owner should never share.
Self-custody wallet: Keep crypto in a self-custody wallet and the keys that control it stay with you, on your own phone or device, instead of with an exchange. Even the wallet's maker can't touch those funds, which also means nobody can restore them if the keys and the recovery phrase are lost.
SEPA Instant: Send euros by SEPA Instant and the money is in the other account within ten seconds, even at 3 a.m. on a Sunday. The service, formally the SEPA Instant Credit Transfer, runs on a European Payments Council rulebook, and EU law has obliged euro-area banks to offer it since 2025.
Significant e-money token: A significant e-money token is an e-money token that the European Banking Authority has classified as big or interconnected enough to need extra rules under MiCA, because it meets at least three of the regulation's significance criteria. If the issuer is an electronic money institution, it then faces stricter reserve, liquidity and capital rules and has its supervision shared between the EBA and its national regulator.
Slippage: Slippage is the gap between the price you expect when you place a trade and the price you actually get once it fills. It grows when the market moves before your order completes, or when there are not enough orders near the quoted price to fill all of it.
Specific identification: If you hold the same coin bought at different prices, specific identification means naming which units you sell, such as the ones bought at the highest price, so your gain or loss is worked out from that purchase's cost. In the US, units you do not identify are treated as sold oldest first.
Stablecoin: A stablecoin is a crypto token built to hold a steady value against something outside crypto, almost always one US dollar, usually because its issuer keeps reserves and promises to buy the token back at that value. The word has no single legal meaning, since EU law sorts these tokens into e-money tokens and asset-referenced tokens and US law regulates "payment stablecoins".
Stablecoin redemption: Stablecoin redemption is handing tokens back to the company that issued them in exchange for the same amount of ordinary money, such as one US dollar per coin, after which the tokens leave circulation. Usually only holders who pass the issuer's identity checks can redeem directly, and the issuer's own policy sets the minimum, the fee and the timing, within limits that EU and US law now impose.
SWIFT: SWIFT is the network banks use to send each other secure instructions for international payments, run by Swift, a member-owned cooperative headquartered in Belgium. A "SWIFT transfer" is an international wire whose instructions travel over that network, while the money itself is moved by the banks along the chain.

T

Travel Rule: Under the Travel Rule, a bank or exchange that sends money or crypto for you has to hand your name and account details, and the recipient's, to the firm that receives the funds. The point is that investigators can later see who paid whom.

V

Virtual asset service provider (VASP): VASP stands for virtual asset service provider, the Financial Action Task Force's catch-all for crypto exchanges, custodians, transfer services and similar firms that handle coins for customers. National laws give the same businesses their own names, for instance crypto-asset service provider in the EU and money services business in the US.

W

Wash sale: Sell a coin at a loss, buy the same coin straight back, and you still hold the same position while your tax records now show a loss. That pattern is a wash sale, and several countries block or defer the loss, each in its own way for crypto.
Withdrawal fee: A withdrawal fee is what an exchange charges to send crypto from your account to an outside address, usually a fixed amount of the coin per withdrawal that changes with the network you pick. Exchanges describe it as covering the blockchain's own network fee, and some add a processing charge of their own.