S M Abbas Jafri

#USCryptoStakingTaxReview The US crypto staking tax landscape is evolving, with proposed reforms aiming to provide clarity and incentives for investors. The Digital Asset PARITY Act, introduced in 2025, suggests a five-year deferral period for staking rewards, taxing them as ordinary income only after this period at their fair market value. This move is expected to boost institutional adoption and market growth ¹ ². *Key Points:* - _Taxation of Staking Rewards_: Currently, staking rewards are taxed as ordinary income upon receipt, with potential double taxation upon sale. - _Proposed Reforms_: The PARITY Act aims to defer taxes on staking rewards for five years, aligning crypto staking with traditional investments. - _IRS Guidance_: Rev. Proc. 2025-31 provides a safe harbor for trusts engaging in staking activities, alleviating tax concerns for institutional investors. - _Reporting Requirements_: Staking income is reported on Form 1040 Schedule 1, with capital gains reported on Form 8949 and Schedule D. The US crypto industry is optimistic about these developments, with expectations of increased institutional participation and market growth. However, challenges remain, including the need for a unified federal framework and addressing double taxation concerns.