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US Makes Crypto Taxes Easier: A New Bill Clarifies Staking Rewards

A bipartisan bill introduced to address double taxation of Proof-of-Stake cryptocurrency rewards

On Tuesday, Representatives Wiley Nickel (D-N.C.) and Drew Ferguson (R-Ga.) introduced the Providing Tax Clarity for Digital Assets Act, targeting a major overhaul in how cryptocurrency staking rewards are taxed. This legislative effort comes in response to the current treatment of digital asset rewards, which Rep. Ferguson describes as "overly complex and confusing," leading to investor perplexity, double taxation, and the migration of American businesses to more favorable tax jurisdictions abroad.

Rep. Ferguson further emphasized: 

"The Providing Tax Clarity for Digital Assets Act would give the industry desperately wanted tax clarity, establish United States leadership in digital asset tax treatment, and encourages innovation and business in the United States.”

Industry and legislative response

The cryptocurrency industry has reacted positively to the bill, which aligns with previous IRS rulings requiring crypto investors to include staking rewards in their gross income. According to advocacy group Coin Center, the bill proposes that taxes on block rewards from proof-of-work or proof-of-stake networks should apply only when these rewards are spent or sold, not when initially acquired.

Coin Center stated on Wednesday:

"This simple policy would resolve major issues with how cryptocurrencies are taxed today and put the technology on a level playing field," 

The Proof of Stake Alliance (POSA) also supported the bill, calling it a "common-sense clarification of existing law." POSA highlighted that the bill 

"promotes tax fairness and compliance by confirming that block rewards are taxed only at the time of their sale or exchange—rather than taxed twice."

Both Rep. Nickel and Rep. Ferguson, who have been active supporters of cryptocurrency and the advancement of digital asset legislation, announced they are retiring and will not seek reelection. Their contributions, particularly this latest bill, are seen as part of their legacy efforts to shape the future of financial technology in the U.S.