US Crypto Tax Bill Leaves Out Mining, Staking Deferral

The US House Ways and Means Committee will consider a 114-page crypto tax package on Wednesday that leaves out a provision that would have allowed miners and stakers to defer taxation of rewards until the tokens are sold.

The Digital Asset Tax Certainty Act, H.R. 10357, was published alongside the committee’s markup notice on Monday. The package does not include the reward-timing provision contained in Representative Mike Carey’s Tax Clarity for Mining and Staking Act, introduced in June.

The provision would have allowed taxpayers to choose between recognizing newly created tokens as income when received or treating them similarly to self-created property and paying tax when sold.

Without the provision, mining and staking rewards would remain taxable when received or brought under the recipient’s control, potentially before they are sold for cash.

The package comes just as the Senate is considering whether to advance the CLARITY Act, which would determine how the US Securities and Exchange Commission and Commodity Futures Trading Commission divide oversight of the US crypto market.

House crypto package covers fees, stablecoins, wash sales

To be sure, the bill retains some of its mining and staking provisions. It would classify income from blockchain validator activities as ordinary income, establish whether it is sourced inside or outside of the United States and allow qualifying investment trusts to stake digital assets without losing their trust status.  

The package would also prevent taxpayers from recognizing gains or losses when crypto is used to pay network or transaction fees of up to $10. It proposes special tax treatment for qualifying US dollar stablecoins and would allow qualifying digital asset loans to occur without being treated as taxable sales.

Other provisions would offer simplified accounting for widely traded crypto assets, extend wash-sale and constructive-sale rules to crypto and establish a voluntary disclosure program for taxpayers seeking to correct earlier digital asset tax violations. 

Related: Trade groups seek to block Illinois crypto tax before January effective date

In June, the committee circulated seven crypto tax drafts ahead of a hearing on digital asset taxation. The proposals covered stablecoins, mining, staking and measures aimed at reducing the tax-reporting burden associated with crypto transactions.

In response, the Blockchain Association, Crypto Council for Innovation and Digital Chamber urged Congress to pass Carey’s legislation as introduced. The groups argued that taxing rewards before they can be sold creates liquidity problems for miners and stakers, while opposing an amendment that would have limited the deferral to five years.

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