Proof of Stake Alliance (POSA) Supports Call for IRS Guidance on Staking
Congressional members call for fair taxation of staking rewards in letter to IRS
August 4, 2020 — Today, the Proof of Stake Alliance (POSA), a industry-driven advocacy organization for Proof of Stake (PoS) technology, with the support of Rep. David Schweikert (R-AZ), Bill Foster (D-IL), Tom Emmer (R-MN), and Darren Soto (D-FL), calls on the Internal Revenue Service (IRS) to examine concerns regarding the taxation of staking rewards. POSA appreciates the support of the co-chairs of the Blockchain Caucus on this important issue, and welcomes continued engagement with the IRS.
Today, Rep. Schweikert, Foster, Emmer, and Soto released a letter to the IRS that addresses concerns over the taxation of staking rewards for proof of stake blockchain networks. The letter stressed the importance of supporting American ingenuity and raised concerns of a “compliance nightmare for taxpayers and the Service alike.” POSA, with the support of our members and partners, worked closely with the co-chairs to draft language for the letter.
“Those who help validate transactions create new blocks in the cryptocurrency blockchain and also create these new tokens. Similar to all other forms of taxpayer-created (or taxpayer-discovered) property — such as crops, minerals, livestock, artworks, and even widgets off the assembly line — these tokens could be taxed when they are sold,” said Rep. Schweikert, Foster, Emmer, and Soto in their letter to the IRS.
“We applaud Congressmen Schweikert, Foster, Emmer, and Soto for their forward-looking leadership to ensure Proof of Stake blockchains and their ecosystems aren’t unduly burdened by regulatory red tape,” said Alison Mangiero, President of TQ Tezos, a POSA member company that builds open source software and drives adoption and awareness of the Tezos protocol. “Staking rewards, similar to a farmer cultivating produce and selling it at market, should be assessed for taxation when they are sold: we don’t tax an apple when it is plucked from a tree or a tomato fresh off the vine. This letter offers a common-sense solution for the IRS to support the development of this promising new technology and encourage more Americans to participate in its growth.”
“We’re very excited to see this progress. Clear guidance on PoS taxation will further the adoption of blockchain technology and will help drive innovation in the ecosystem,” said Joe Lallouz, Co-Founder and CEO of Bison Trails, a POSA member company.
The Proof of Stake Alliance, founded in 2019, is committed to advancing the proof of stake industry globally. As an industry-driven organization, we work with members to find solutions, raise awareness, and educate policymakers. POSA is honored to work with a wide range of industry experts including University of Virginia School of Law Adjunct Professor Abe Sutherland, the author of the most extensive analysis of staking tax issues to date. The analysis was published in tax journal Tax Notes and is available for download on SSRN.
If you are interested in learning more about POSA and the critical work of our members, please email email@example.com.
The Proof of Stake Alliance (POSA) represents innovators, academics, service providers, and industry professionals and addresses key areas of regulatory uncertainty provides a platform for the staking industry in the United States and drives engagement with policymakers. POSA is committed to educating and advancing policy discussions on behalf of the industry regarding tax and regulatory issues. For more information, visit www.proofofstakealliance.org/