Welcoming O(1) Labs, Ava Labs, and Solana to the Proof-of-Stake Alliance and the results of Working Group #1: Taxation in Proof-of-Stake,
It has been an exciting few weeks at POSA since our public launch. Much of staking industry has rallied to support POSA’s primary mission of educating legislators, regulators, and other stakeholders on the benefits of the proof-of-stake consensus algorithm. POSA members joined together to conduct the first working group which focused on the taxation of staking rewards. Additionally, POSA is excited to announce the addition of a few new members all who are leaders in the staking space.
Part of POSA’s initial goal was to bring together distributed ledger projects utilizing the proof-of-stake consensus mechanisms. As noted in our announcement post, a majority of these projects originate from cutting-edge research at leading American research institutions and real-world expertise from top American companies in the technology and financial industries. POSA members are the experts on this emerging technology and bring the acumen to educate regulators and policymakers on its potential.
O(1) Labs, creators of Coda Protocol —is the creator of the succinct blockchain Coda, which uses recursive zk-SNARKs to create a fixed size blockchain. This enables wide reaching applications while allowing every user of the protocol to become a full node without having to trust intermediaries. The O(1) Labs team consists of world class experts in cryptography and functional programming. Its investors include Polychain, Paradigm, Accomplice, Coinbase Ventures, and General Catalyst.
Ava Labs — founded by Professor Emin Gün Sirer and researchers from Cornell University, AVA Labs is building a next-generation blockchain platform with revolutionary scalability, decentralization, security, and flexibility. Ava Labs investors include Andreessen Horowitz, Polychain, Metastable, and Initialized.
Solana — is creating a high-performance blockchain that can scale over 700,000 transactions per second on stock hardware to deliver on the promise of blockchain. The Solana founding team brings significant industry experience from their time at telecom hardware giant Qualcomm.
Working Group #1: Taxation and Proof-of-Stake
On Wednesday, August 7th, POSA hosted its first working group. The objective of Working Group #1 was to have an exploratory, wide-ranging discussion of potential taxation frameworks for stakable assets and rewards.
Steve Turanchik, a tax attorney at Paul Hastings, LLP, led the working group. Steve previously worked at the U.S. Department of Justice, Tax Division, and also has significant experience working with digital assets including working with major virtual currency exchanges and is also as a member of the AICPA’s Virtual Currency Task Force. Through Paul Hastings’ engagement with POSA, Steve is in the process of drafting a POSA sponsored taxation memo which is expected to be used to engage with the IRS, U.S. legislators, and policymakers across the world. The POSA working group focused on the potential approaches to taxing staking rewards and the advantages and shortcomings of such approaches. Additionally, there was a spirited conversation around potential staking based policy proposals and the reasons why Congress might be willing to provide favorable tax treatment as a way to promote innovation and growth in the United States.
The working group included over 20 participants representing a diverse range of participants across the staking space. Additionally, domain experts David Shakow, a tax professor at the University of Pennsylvania Law School, and Abe Sutherland, an adjunct professor from the University of Virginia Law School, took part in the working group and were able to provide their expertise to the discussion.
Below is a list of companies that participated in the working group. POSA expects to have its staking taxation memo finalized in the coming weeks.
University of Pennsylvania Law School
University of Virginia Law School
We are also interviewing researchers to assist in preparing POSA deliverables and to be a crucial part of the POSA team. If you are interested in volunteering to further POSA’s mission please contact Liang@proofofstakealliance.org.