Cryptocurrency Accounts in the Crosshairs: Why the US Is Urgently Revisiting Staking Tax Rules

The political storm surrounding the taxation of staking rewards in cryptocurrencies has reached a crescendo in Washington. The stakes involve millions of private investors who currently have to navigate conflicting IRS regulations that could alter the development of digital assets in the US. Republican lawmakers in the House of Representatives have decided to act decisively, announcing serious intentions to repeal these regulations — and the deadline is approaching faster than many expect.

Why staking rewards have become a source of tax conflicts

Let’s start with the basics: what exactly changed in 2023? The IRS determined that each token received as a reward for staking cryptocurrencies should be considered ordinary income at the moment it is credited to your wallet. The specific fair market value of these assets on the day of receipt — that’s the whole calculation.

This created a paradoxical situation for network participants. If you received 1 Ethereum as a staking reward when its value was $3,000, the tax agency automatically considers $3,000 as additional annual income. And you haven’t necessarily sold or converted this asset into cash.

Practical implications for ordinary users

This system of rewarding staking creates a whole series of logistical puzzles:

Liquidity crisis as a real problem. An investor may owe large amounts of taxes but have no cash on hand. Conditionally: you received a reward worth $5,000 but did not plan to sell the assets. However, the tax declaration requires paying tax on this amount — often forcing you to sell other assets to cover the obligation.

Administrative overload. Tracking thousands of small transactions across different staking protocols, recording the value of each reward at a specific moment — this is a real nightmare for accounting. Usually, this obligation falls on small participants, who ensure the security of decentralized networks through their work.

Why the industry demands change

Legislators and the crypto sphere argue simply and logically. They emphasize the principled difference between traditional income and newly created assets. Rewards for staking cryptocurrencies are not wages, not interest on deposits in the traditional sense. They are newly created digital assets that arise during transaction validation.

Advocates for change propose an alternative approach: taxing such rewards as capital gains only upon their sale or transfer. This would give investors more flexibility, better cash flow, and stimulate the development of the blockchain industry in the US. Under the current rule, many developers and major players might migrate to jurisdictions with more favorable taxation.

Timeline of changes and the 2026 deadline

Republicans insist on repealing these rules before they fully come into effect for the 2026 tax year. This creates urgency in the discussion. If lawmakers listen, it will be a major victory for the digital assets sector and signal a shift in official policy regarding regulation.

A positive resolution would result in:

• Increased participation of institutional and retail investors in Proof-of-Stake networks, including Ethereum, Cardano, and Solana
• Establishing the US as a leading regulator in the blockchain sphere
• Significant growth in investments in the American crypto industry

If the rule remains unchanged, it could trigger a talent and capital outflow abroad, weakening the US position on the global crypto scene.

What investors should do in the current situation

While the political process is still ongoing, you will need to adhere to existing legislation. This means:

• Keep accurate records: Document each staking reward, its value at the time of receipt, and the date
• Seek professional advice: Consult a tax professional familiar with cryptocurrencies — mistakes can be costly
• Take an active stance: Contact your representatives in Congress, voice your position — lawmakers listen to voters’ voices

Frequently asked questions

Does the federal rule apply to all states? Yes. The IRS regulates taxes federally, so the rules are valid regardless of where you live — in Texas, Wyoming, or elsewhere.

How are staking rewards taxed compared to mining? Currently, the IRS considers both as ordinary income at the moment of receipt. However, the discussion about repeal is focused on the unique role of staking in Proof-of-Stake networks.

If the rule is repealed, will it have retroactive effect? It depends on the details of the bill, but repeal could be retroactive or effective from a specified date.

Does this affect the current tax year? Yes. Until the law is officially repealed, you must declare staking rewards as income at the time of receipt — this is a requirement for 2024 and subsequent years.

Conclusion: a decisive moment for crypto in the US

The initiative to repeal the taxation of staking cryptocurrencies is not just another political maneuver. It is a pivotal point where traditional tax paradigms clash with the realities of digital economies. Billions of dollars, hundreds of thousands of network participants, and the global competitiveness of the American crypto industry are at stake.

The coming months will be critical. If lawmakers meet industry demands, the US will affirm its position as a leader in innovation and fair regulation. If not — investors and developers will start looking for other havens. The 2026 deadline doesn’t seem far off — the time to act is already underway.