A bipartisan group of lawmakers, Reps. Wiley Nickel (D-N.C.) and Drew Ferguson (R-Ga.), have introduced legislation to provide tax clarity for digital assets. The bill aims to clarify that staking rewards should only be taxed at the point of sale to avoid double taxation.
Representative Ferguson emphasized the need for clarity on the treatment of digital asset compensation, citing confusion between investors and companies and the risk of U.S. companies moving abroad due to tax complexities. He emphasized that the bill would provide much-needed clarity, establish U.S. leadership in digital asset tax treatment, and foster domestic innovation and business.
The bill comes in response to the Internal Revenue Service’s ruling last year that cryptocurrency investors who receive rewards through staking services must include the value of those rewards in their gross income.
According to CoinCenter, the bill proposes that taxes on block rewards in proof-of-work or proof-of-stake networks should only apply when they are spent or sold, not when they are earned. This approach aims to address key 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 when they are sold or exchanged.
Rep. Nickel, a cryptocurrency supporter, has previously advocated for digital asset legislation and promoted the advancement of the Financial Innovation Technology Act. Both Nickel and Ferguson have announced their retirement and will not seek re-election.
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