New US Bill Aims to Clarify Taxation of Staking Rewards
Two bipartisan lawmakers, Reps. Wiley Nickel, D-N.C., and Drew Ferguson, R-Ga., have introduced the Providing Tax Clarity for Digital Assets Act. The bill aims to clarify that staking rewards should only be taxed at the time of their sale to prevent double taxation.
Rep. Ferguson emphasized the need for clarity in the treatment of digital asset rewards, citing confusion among investors and businesses, as well as the risk of American businesses relocating overseas due to tax complexities. He highlighted that the bill would provide much-needed clarity, establish US leadership in digital asset tax treatment, and foster innovation and business within the country.
The bill comes in response to a ruling by the Internal Revenue Service last year, which stated that crypto investors earning rewards from staking services must include the value of those rewards in their gross income.
According to Coin Center, the bill proposes that taxes on block rewards from proof-of-work or proof-of-stake networks should only be applied when they are spent or sold, rather than when they are acquired. This approach aims to resolve major issues with current cryptocurrency taxation and ensure fair treatment of the technology.
The Proof of Stake Alliance echoed similar sentiments, describing the bill as a “common-sense clarification of existing law” that promotes tax fairness and compliance. The alliance emphasized that the bill would prevent double taxation by taxing block rewards only at the time of their sale or exchange.
Rep. Nickel, a supporter of crypto, has previously advocated for digital asset legislation and pushed for the advancement of the Financial Innovation and Technology Act. Both Rep. Nickel and Rep. Ferguson have announced their retirement and will not seek reelection.
Featured Image: Freepik