A bipartisan group of US House lawmakers is urging the Internal Revenue Service to revisit how cryptocurrency staking rewards are taxed, arguing that current rules create unnecessary complexity and risk taxing income that hasn’t actually been realized.
Lawmakers ask for updated guidance
In a letter sent Friday to Treasury Secretary and acting IRS commissioner Scott Bessent, 18 House members led by Republican Mike Carey called on the agency to review its 2023 guidance on staking rewards and update it before the 2026 tax year.
Carey said the request is focused on basic tax fairness. Current IRS guidance treats staking rewards as taxable income at the moment they are received and again when they are sold, a structure lawmakers describe as a form of double taxation.
The letter asks the IRS to shift taxation to the point of sale, so staking rewards are taxed based on actual economic gain rather than paper income.
Impact on participation and network security
Lawmakers argue the existing framework discourages participation in staking, which is a core security mechanism for many blockchain networks. Because rewards can fluctuate in value and often cannot be sold immediately, taxing them upon receipt creates record-keeping burdens and exposes taxpayers to higher-than-expected liabilities.
“Millions of Americans own tokens on these networks,” the lawmakers wrote.
They warned that the combination of administrative complexity and the risk of over-taxation reduces participation in staking, despite its role in maintaining network security and supporting domestic blockchain infrastructure.
The letter also asks whether any administrative obstacles would prevent the IRS from updating its guidance before the end of the year, framing the change as consistent with broader goals of maintaining US leadership in digital asset development.
Parallel efforts in Congress
The Carey-led letter is not the only push to rethink crypto tax rules. Over the weekend, Representatives Max Miller and Steven Horsford introduced a discussion draft aimed at easing tax treatment for everyday crypto users.
Their proposal includes an exemption for small stablecoin transactions from capital gains taxes and a deferral option for staking and mining rewards. Instead of changing the taxation trigger entirely, the draft would allow taxpayers to defer income recognition on staking or mining rewards for up to five years.
That approach reflects a narrower adjustment, but it signals growing bipartisan interest in reducing compliance burdens tied to blockchain activity.
Industry support and broader context
Industry groups have echoed lawmakers’ concerns. Miller Whitehouse-Levine, chief executive of the Solana Policy Institute, said mining and staking are essential to securing public blockchains and argued that the US tax code should encourage participation rather than impose rules that are difficult for ordinary users to follow.
The debate traces back to the IRS’s 2023 guidance, which treats staking rewards as ordinary income upon receipt, unlike other forms of newly created property. Whether the IRS revises that position administratively or Congress steps in legislatively, the issue is quickly becoming a focal point in the broader conversation about how the US taxes crypto activity.
Parallel push on crypto fraud enforcement
The staking tax debate is unfolding alongside a separate bipartisan effort in Congress to tighten coordination against crypto-related fraud.
This week, Senators Elissa Slotkin and Jerry Moran introduced the SAFE Crypto Act, a proposal that would create a federal task force focused on improving how agencies respond to cryptocurrency scams. Rather than expanding regulatory authority, the bill centers on coordination, bringing together the Treasury Department, federal law enforcement, financial regulators, and select private-sector specialists.
Supporters say the goal is to close gaps that leave retail-focused fraud cases scattered across agencies. The task force would work on identifying common scam patterns, improving investigative methods, and sharing technical resources with state and local law enforcement, which often lack the tools to pursue crypto cases effectively.
The bill also includes a public education mandate and annual reporting to Congress. It arrives amid rising concern over the scale of crypto-related crime, with blockchain analytics firm Chainalysis estimating more than $51 billion in illicit crypto transactions in 2024.
If adopted, the SAFE Crypto Act would signal a broader shift in Washington toward treating crypto fraud as a cross-agency enforcement issue rather than a narrow regulatory problem.
Gunel Ismayilova
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