We have fiat money; paper money made legal tender by a government decree, and we have cryptocurrencies which operate independently from a central bank using military grade encryption. Cryptocurrency is currency of the people, not of the state.
So should we ever pay taxation to the state from our cryptocurrencies?
They came to him and said, "Teacher, we know that you are a man of integrity. You aren't swayed by others, because you pay no attention to who they are; but you teach the way of God in accordance with the truth. Is it right to pay the imperial tax to Caesar or not? Should we pay or shouldn't we?"
But Jesus knew their hypocrisy.
"Why are you trying to trap me?" he asked. "Bring me a denarius and let me look at it."
They brought the coin, and he asked them, "Whose image is this? And whose inscription?"
"Caesar's," they replied.
Then Jesus said to them, "Give back to Caesar what is Caesar's and to God what is God's."
And they were amazed at him.
Mark 12 14-17 NIV
What this shows us is that fiat money is for the government, but our cryptocurrency is ours. When I have my paper notes in my pockets, it's the Queen's face down there, but when I have my Cryptocurrency they are flying in the sky with Satoshi.
Are cryptocurrencies free from taxation from the state?
“If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalized” - Lysander Spooner
Conclusion: Cryptocurrencies are legally free from taxation from the state. The government is acting ultra vires if it attempts to tax cryptocurrencies.