US IRS Makes Crypto Staking Income Declaration Mandatory

• The IRS has declared that US investors must disclose cryptocurrency staking earnings as income.
• The decision makes it clear that, once the taxpayer gains control of the tokens, staking earnings should be counted as a component of their gross income.
  Investors now have clarity on their tax obligations thanks to the IRS’s first explicit mention of staking rewards.
• People who stake on Proof-of-Stake (PoS) blockchains and those who do so through centralized cryptocurrency exchanges are covered by the decision.
  When the taxpayer has “dominion and control” over staking rewards, not when they are accrued but locked, is when the fair market worth of those rewards will be determined.
• The tax authorities have also stated that capital gains tax and income tax are applicable to cryptocurrency mining profits.
• Investors in the US may be subject to tax rates of up to 37% on short-term capital gains and cryptocurrency income, compared to 0% to 20% for long-term capital gains.
• In 2021, the IRS started taxing cryptocurrencies and began using “digital assets” in income tax reporting instead of “virtual currencies.”
• The IRS decision comes at a time when federal regulators, especially the SEC, are paying more attention to cryptocurrency staking services provided by exchanges.
• In response to regulatory pressure, certain exchanges have modified or suspended their staking systems to prevent possible violations of securities laws.

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