Congressional lawmakers urge the IRS to craft proactive tax policy for crypto staking rewards

advertisement

A group of Congressional lawmakers have sent a letter to the Internal Revenue Service (IRS) that urges the U.S. tax agency to write policy that does not impede proof of stake technology.

Representatives David Schweikert, Bill Foster, Tom Emmer and Darren Soto addressed IRS Commissioner Charles Rettig, explaining how staking works and why existing tax policy could directly impact U.S. interest in and utilization of the technology.

"It is possible the taxation of 'staking' rewards as income may overstate taxpayers' actual gains from participating in this new technology," read the letter. "It could also result in a reporting and compliance nightmare, for taxpayers and the Service alike."

The group of lawmakers called for staking rewards to be taxed as they are sold, since those who help validate transactions create the new tokens as well as append new blocks on the blockchain. Other forms of taxpayer-created property, like crops and artwork, are taxed as they are sold, and the letter's signatories argue that tokens produced via staking are more like these assets.

The Proof of Stake Alliance (POSA), an organization of industry members dedicated to promoting staking, worked closely with the representatives on the language of the letter, according to a statement.  Alison Mangiero, President of POSA member company TQ Tezos, said the letter offers a "common-sense solution" for the regulator to support staking.

"Staking rewards, similar to a farmer cultivating produce and selling it at market, should be assessed for taxation when they are sold: we don't tax an apple when it is plucked from a tree or a tomato fresh off the vine," said Mangiero in a statement.

Schweikert, Emmer, Soto and Foster are all members of the Congressional Blockchain Caucus — a bipartisan group of Congressional members focused on advancing policy around the technology. The group has previously backed legislation intended to support the development and use of cryptocurrencies and blockchain.

Related Reading

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

Why BTG Pactual is launching a crypto platform

Brazil-based BTG Pactual, Latin America’s biggest investment bank, is launching its own crypto asset platform that will initially support bitcoin and ether trading. The platform will be called Mynt and allow customers to purchase bitcoin and ether, BTG Pactual’s Head of Digital Assets André Portilho tells The Block. Eventually, the platform will support other digital […]
Read Full Story
Sep 24, 2021, 9:17PM UTC

TRON USDC now available

Delivering on a vision for an interoperable global standard for dollar digital currency, Circle and TRON have partnered to make USD Coin (USDC) available on the TRON blockchain, which has grown to more than 56 million accounts and nearly 2.5 billion transactions since its founding just four years ago. TRON is home to a broad ecosystem for digital assets in Asia and around the world, and the TRON community can now benefit from easy access to the world's fastest-growing, regulated dollar digital currency. 
Read Full Story
Sponsored Post
More