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華爾街日報Why A 2023 IRS Rule Is Becoming A 2026 Crypto Tax Time Bomb On Capitol Hill
A group of Republican lawmakers is urging the Trump administration to repeal a 2023 IRS rule taxing cryptocurrency staking rewards, warning that the policy could lock in higher tax burdens for investors starting with the 2026 tax year.
House Republicans Push Treasury To Act Before 2026
Nineteen House Republicans sent a letter late Thursday to Treasury Secretary Scott Bessent urging the immediate repeal of IRS guidance issued in 2023 that treats staking rewards as taxable income upon receipt.
The lawmakers argue that if the rule remains in place through the end of 2025, it will become embedded in tax filings for 2026.
The rule applies to proof-of-stake networks such as Ethereum (CRYPTO: ETH) and taxes rewards at their fair market value once taxpayers gain the ability to sell or transfer them.
Temporary lockups can delay taxation, but do not eliminate it.
Why Staking Taxes Are So Controversial
Under current IRS guidance, staking rewards are treated as ordinary income under Section 61 of the tax code.
Industry advocates have long argued that this approach taxes investors on assets before gains are realized, creating cash-flow pressure when rewards are received but not sold.
Representative Mike Carey of Ohio, who led the House effort, said the current framework discourages participation in network security by increasing administrative burden and tax exposure.
He and other lawmakers argue that staking rewards should be treated as newly created property and taxed only when sold, similar to capital assets.
"Network security and American leadership require taxpayers to stake those tokens," the letter stated, adding that administrative burden and potential overtaxation reduce participation.
Senate Pressure Builds As Well
Senator Todd Young of Indiana, a Republican member, has previously urged the IRS to review the 2023 staking guidance, according to Bloomberg.
Young warned that the rule creates uncertainty for taxpayers and could complicate upcoming digital asset legislation.
Democratic lawmakers have defended the IRS position, arguing that staking rewards function as compensation for services.
Senator Tina Smith of Minnesota has said in past hearings that taxing rewards when received aligns with how other forms of compensation are treated under U.S. tax law.
Institutional Stakes Rise As Products Add Yield
The debate has intensified as staking becomes more central to the cryptocurrency economy.
Last month, the Treasury Department approved staking activity within certain Wall Street-traded cryptocurrency products.
Industry lobbyists say reversing the guidance before year-end would give lawmakers more flexibility to draft a broader crypto tax framework in early 2026.
Without action, they warn the existing rule could shape legislation by default.
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