As crypto staking moves from niche hobby to mainstream investment, Washington is finally zooming in on a long-ignored wrinkle in U.S. tax policy that could shape the future of proof-of-stake networks and millions of investors. Why it matters - Lawmakers warn that unclear IRS rules on staking rewards may create double taxation and heavy reporting burdens, discouraging people from staking — a process that helps secure and stabilize many blockchains. - With several tax provisions set to expire in 2026, Congress wants clarity now so staking rules aren’t locked in through court decisions or left to be resolved amid broader tax fights. What lawmakers are doing - Eighteen bipartisan House members, led by Rep. Mike Carey, sent a letter to the IRS asking it to review current staking guidance and whether administrative changes could be made before the 2026 tax year. The lawmakers argue that taxing rewards only when they’re sold would better reflect real economic gain and simplify reporting. - Separately, Representatives Steven Horsford and Max Miller unveiled a discussion draft called the Digital Asset PARITY Act. It aims to overhaul several tax treatments for digital assets: - A de minimis exemption for regulated stablecoin payments used in everyday transactions (small gains or losses would generally be untaxed, similar to low-value foreign currency exchanges). - A provision allowing taxpayers to defer income recognition from staking and mining rewards for up to five years — not a full removal of immediate taxation, but a potential interim relief measure. - Extensions of wash-sale rules and certain securities tax provisions to actively traded digital assets to reduce abuse while avoiding new loopholes. What this could mean - If adopted, these changes could reduce administrative strain on investors and custodians, better align tax timing with actual economic gains, and remove disincentives to stake — which could help network security and participation. - Nothing is guaranteed: the IRS could respond in various ways, and legislation faces the usual political and procedural hurdles. But the bipartisan push signals growing Congressional appetite for a more technical, outcome-oriented approach to crypto tax policy. What to watch next - The IRS response to the lawmakers’ letter. - Whether the PARITY Act advances beyond discussion draft stage and what form any compromise takes. - Any interim administrative fixes before the 2026 tax year and how courts might weigh in if uncertainty persists. Bottom line: Congress is moving from high-level crypto debates to nitty-gritty tax mechanics. The coming year will likely be decisive for whether staking stays mired in uncertainty or moves toward a clearer, more predictable tax framework. (Cover image: ChatGPT; ETHUSD chart: TradingView) Read more AI-generated news on: undefined/news

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