A bipartisan group of 18 US House lawmakers is urging the Internal Revenue Service to review its approach to taxing crypto staking rewards, arguing that current interpretations impose unnecessary burdens on investors. In a letter sent on December 18 to acting IRS Commissioner Scott Bessent, the group asked the agency to update guidance ahead of 2026. The lawmakers said the existing framework risks slowing participation in blockchain networks and undermining US competitiveness in digital assets.
Under current interpretations, staking rewards are generally treated as taxable income when received, based on their market value at that time. Lawmakers argue this results in effective double taxation when the assets are later sold, and capital gains taxes apply. They contend that taxing rewards only at the point of sale would better reflect actual economic gains, particularly given the volatility of crypto markets.
Market Impact and Blockchain Security Concerns
The letter frames staking as a core component of proof-of-stake networks, which rely on user participation to maintain security and operational integrity. According to the lawmakers, the administrative complexity and potential over-taxation associated with current rules discourage everyday users from staking their assets. This, they argue, could weaken network security and reduce US influence in the development of blockchain infrastructure.
Representative Mike Carey, who led the effort, described the request as an appeal for consistent tax treatment rather than a push for preferential treatment. The lawmakers emphasized that their proposal would not reduce tax compliance but instead align staking with established capital gains principles used across other asset classes. The request also reflects broader concerns among policymakers that unclear or restrictive tax rules could push innovation and participation offshore.
Broader Tax Reform Efforts in Digital Assets
The staking tax debate comes amid wider discussions in Congress over how digital assets should be treated under US tax law. Earlier proposals from Representatives Max Miller and Steven Horsford outlined potential exemptions for small stablecoin transactions and offered options to defer income recognition on staking and mining rewards for up to five years. Supporters argue such measures could provide interim relief while regulators and lawmakers work toward longer-term clarity.
Those proposals also seek to extend certain securities tax rules to crypto, including wash sale restrictions and updated treatment of crypto lending arrangements. While narrower in scope, the lawmakers’ letter to the IRS highlights growing pressure on federal agencies to adapt existing frameworks to evolving crypto market structures. The IRS has not yet indicated whether it plans to revise its guidance, but the request underscores increasing institutional scrutiny of how digital asset activity is taxed in the United States.
