On July 31, the US Internal Revenue Service (IRS) introduced fresh rules declaring that U.S. investors are required to report earnings from cryptocurrency staking as income in the year they receive these coins.This rule applies to both individual investors who become validators in Proof-of-Stake networks and those who stake their coins on crypto exchanges.
So, how will the taxable amount be determined? According to the IRS, it will be based on the value of the staking rewards in dollars at the time they are accessible to the investors. Taxes are not necessarily due when the rewards are received in crypto; instead, they are owed when the investor sells or exchanges the staking reward for fiat. If the rewards are still locked and inaccessible, they do not count for taxes.
The context
This move by the IRS comes amid increased scrutiny by federal regulators on various cryptocurrency activities, including staking services provided by different exchanges. Notably, Coinbase has paused its staking services in some states of America due to regulatory concerns.
Ryan Selkis, the founder of Messari, a cryptocurrency data and research company, tweeted that the IRS is handling crypto staking in the same way they deal with stock dividends.
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