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IRS Faces Pressure from House Republicans to Reform Crypto Staking Tax Regulations

A group of 19 Republican House members is urging the IRS to amend its taxation policy regarding crypto staking rewards before the 2025 tax year begins.

In a letter addressed to Treasury Secretary Scott Bessent, the lawmakers expressed their concern that current rules deem staking rewards as taxable income upon receipt.

This stance has faced criticism from crypto advocates who argue that these rewards should be classified as new capital property, taxable only upon sale.

Rep. Mike Carey (R-OH), leading the charge, emphasized the importance of fair tax treatment for the evolving crypto industry to maintain America's status as a leader in this sector.

Staking rewards incentivize users to contribute to a network's security through proof-of-stake protocols, generating additional tokens for those who stake their assets.

With increasing interest in staking from larger institutions, the current tax framework is viewed as a barrier that could deter participation.

Last month, the Treasury endorsed Wall Street-traded crypto products that can generate staking rewards, signaling a growing acceptance of this practice.

Although the Trump administration has shown openness to modifying these tax rules without requiring Congressional approval, action remains pending.

The Republican push not only aims to address immediate tax concerns but also seeks to facilitate a broader and more comprehensive crypto tax bill early next year.

Industry insiders believe that revising the IRS guidance on staking could pave the way for smoother legislative efforts in the future.