Oh yes it does, according to the IRS:

> Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?

> A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets.

Source: https://www.irs.gov/individuals/international-taxpayers/freq...

Yep, same thing as investing in a foreign currency that increases relative to the USD. When you convert it into a purchase you are realizing a gain, which is taxed.

Heck, even savings account interest is taxable.