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August 04, 2020

Schweikert, Foster, Emmer, and Soto Lead IRS Letter to Ensure Consumers Can Utilize Proof of Stake Networks

WASHINGTON, DC – Today, Congressman David Schweikert (AZ-06), Co-Chair of the Congressional Blockchain Caucus, along with Caucus Co-Chairs Congressman Bill Foster (IL-11), Congressman Tom Emmer (MN-06), and Congressman Darren Soto (FL-09) sent a letter to the Internal Revenue Service (IRS) asking for guidance on the taxation of “block rewards” in a proof of stake network. Currently, taxpayers are not given guidance for how participating in “staking” should be treated, which could result in unintentionally dissuading participation in this new technology. 

“I am pleased to work with my colleagues on the Congressional Blockchain Caucus to  ensure taxpayers have the guidance necessary to correctly report their participation in proof of stake networks,” said Rep. Schweikert. “We must continue working to futureproof our policies to ensure innovation can continue taking shape, while also certifying individuals will be accountable for their transactions.”

“American taxpayers deserve clear guidance when they invest in cryptocurrency so that they can comply with their tax obligations,” said Rep. Foster. “I’m proud to join my fellow co-chairs of the House Blockchain Caucus to urge the IRS to futureproof tax regulations so that retail investors have the clarity they need to responsibly invest in cryptocurrency, while ensuring that these tax regulations do not unduly hinder innovation.”

“Innovators in the cryptocurrency space deserve certainty and clear communication from the IRS,” said Rep. Emmer. “We need to ensure that the United States’ tax policy and regulatory environment does not harm this critical innovation. Proof of stake and block rewards may be new to many in Washington, but this consensus mechanism is one of many that has existed for years now. The IRS must take the time to learn about these differences and apply appropriate guidance for these emerging technologies.”

“As Americans become more interconnected in the world of blockchain and cryptocurrency, proper tax guidance is needed to ensure transformation continues to take place in this ecosystem,” said Rep. Soto. “The evolution of innovation is redefining the future of mainstream finance and it’s our role, as co-chairs of the Congressional Blockchain Caucus, to help more Americans take part in the benefits that will come from this progression in the utility of these technologies.”

“As a leading voice for the proof of stake industry, the Proof of Stake Alliance (POSA) appreciates the support of the co-chairs of the Blockchain Caucus on this important issue. Education is the foundation of clear and fair public policy, and we believe continued engagement with the IRS and congressional leaders will lead to a thriving proof of stake industry in the United States.”

“If the U.S. is to lead in blockchain technology, we have to get cryptocurrency tax policy right. We are glad to see a bipartisan understanding of how “block rewards” work and how they should be treated by the IRS,” said Jerry Brito, Coin Center Executive Director.

“We applaud this group of bipartisan lawmakers for their elegant solution to issues related to taxing “proof of stake” rewards. Taxing these rewards as created property will simplify the reporting process, opening up these these staking networks for more participants, and ensuring that the U.S. pursues a technology-agnostic national tax policy,” said Kristin Smith, Executive Director of the Blockchain Association. 

To read the full letter, click HERE

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