This ensures stakers face taxation based on actual economic gain instead of unrealized value.
Crypto News
Eighteen bipartisan House lawmakers have asked the Internal Revenue Service to review crypto staking tax rules before 2026, arguing that current regulations create burdensome double taxation. Republican Mike Carey led the group in a Friday letter to acting IRS commissioner Scott Bessent, requesting updated guidance on staking rewards.
The letter calls for applying taxes at the time of sale rather than upon receipt of rewards. This ensures stakers face taxation based on actual economic gain instead of unrealized value. Current laws tax stakers when receiving rewards and again when selling them, hindering participation in staking markets that support fundamental blockchain operations.
Carey stated that the letter requests fair tax treatment for digital assets and that ending double taxation represents progress toward that goal. The lawmakers argued that millions of Americans own tokens on proof-of-stake networks. Network security and American leadership require taxpayers to stake tokens, but administrative burden and over-taxation prospects discourage participation.
The letter asks if administrative barriers prevent updating guidance before year-end. Lawmakers assert changes should support the current administration's goal of strengthening U.S. leadership in digital asset innovation. The push represents one of multiple efforts to reform cryptocurrency tax treatment in recent weeks.
House representatives Max Miller and Steven Horsford introduced a discussion draft on Saturday, aiming to ease crypto tax obligations. The proposal exempts small stablecoin transactions from capital gains taxes and offers deferral options for staking and mining rewards. The representatives chose a deferral approach rather than completely changing current laws.
The proposal allows taxpayers to elect to defer income recognition on staking or mining rewards up to five years instead of immediate taxation upon receipt. This differs from Carey's letter requesting taxation only at sale. Both approaches seek to reduce tax burdens on participants in proof-of-stake networks and mining operations.
Current IRS guidance treats newly received staking rewards as ordinary income at fair market value on receipt date. Taxpayers then face capital gains or losses when selling rewards based on price changes since receipt. Critics argue this creates complexity and taxes unrealized gains before stakers can access liquid value.
The bipartisan nature of the push suggests growing Congressional support for revising digital asset tax treatment. Lawmakers from both parties signed Carey's letter to the IRS. The timing before year-end indicates urgency to implement changes affecting 2025 tax filings for millions of American crypto holders participating in network validation through staking activities.
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