US lawmakers have asked the IRS to address staking taxation in a way that does not interfere with the development of the Proof-of-Stake (PoS) model.
The initiative was attended by Congressmen David Schweikert, Bill Foster, Tom Emmer and Darren Soto. They are part of the blockchain development working group, and have previously proposed to develop regulations that create favorable conditions for the use of cryptocurrencies in the United States. In an address to IRS Commissioner Charles Rettig, the congressmen outlined the basic principles of staking and explained how current US laws can directly affect the use of blockchain and the spread of staking in the country.
Congressmen explained that they generally support taxation of the cryptocurrency industry. However, if staking rewards are subject to income tax, the tax charged may exceed staking profits. In addition, tax reporting and compliance with formal requirements will become a "real nightmare" for users and cryptocurrency services. Legislators have proposed taxing staking only at the sale stage, similar to art and crops.
The letter to the IRS was written with input from the Proof of Stake Alliance (POSA), which was created to promote staking. POSA President Alison Mangiero believes that the appeal to the regulator proposed a reasonable compromise solution, which is aimed both at supporting staking and at keeping taxes on track.
As a reminder, in May, the POSA alliance submitted to the US Securities and Exchange Commission (SEC) industry standards for regulating PoS protocols to accelerate the development of staking. The alliance has 18 members and was joined in January by Coinbase Custody and Bison Trails.
