Regulation
New US bill aims to eliminate double taxation on crypto staking rewards
Two US lawmakers have proposed a bill that clarifies the tax framework for cryptocurrency staking rewards.
Bipartisan lawmakers, Reps. Wiley Nickel, D-N.C., and Drew Ferguson, R-Ga., introduced the Tax Clarity for Digital Assets Act on May 1 to clarify how staking rewards are taxed. The law proposes to avoid double taxation by taxing wagering rewards only at the time of sale.
The bill would define staking rewards as property created under the U.S. tax code.
“The Digital Assets Tax Clarity Act would provide desperately needed tax clarity to the industry, establish U.S. leadership in the tax treatment of digital assets, and encourage innovation and business in the United States” , said Representative Ferguson.
Staking rewards are earned by cryptocurrency holders who actively participate in securing and validating a blockchain network, receiving additional tokens as an incentive. The complexity comes from the fact that their taxation remains unclear, with many investors unsure whether rewards should be taxed upon receipt or sale.
The proposed law responds to a previous decision by the Internal Revenue Service. According to the tax watchdog, crypto investors who earn staking rewards must include the value of those rewards in their gross income when filing their taxes.
The bill has received positive feedback from the wider community. The idea of taxing block rewards from proof-of-work or proof-of-stake networks only at the time of sale was met with enthusiasm. In a statement to crypto.news, Taha Abbasi, chief technology officer at staking technology infrastructure provider Ferrum Network, expressed optimism, saying:
“We welcome the initiative of U.S. Congressman Drew Ferguson (R-GA) and Congressman Wiley Nickel (D-NC) to facilitate clarification of tax law for digital assets specifically related to staking technologies. […] We believe this bill will help solidify the United States not only as a leader in technical innovation, but also in legal and regulatory innovation to support our ever-evolving technical ecosystem.
Meanwhile, Sheila Warren, CEO of the Crypto Council for Innovation, called the law “right to the point,” adding that the bill will provide “necessary clarity.”
Rep. Nickel and Rep. Ferguson advocated for the implementation of clear regulatory frameworks for digital assets. Last year, Rep. Nickel played a key role in push the Financial Innovation and Technology Act, which aims to create a regulatory framework for digital assets designed to protect consumers and encourage innovation.
The bill closely followed the fourth Bitcoin halving event on April 19, which reduced Bitcoin mining rewards from 6.25 BTC to 3.125 BTC per block.