In 2019, POSA briefed policy makers on Capitol Hill and at the Treasury Department about “proof-of-stake,” a form of coming to consensus on a blockchain, and the cryptocurrency tokens that are created by participants in such networks. POSA’s lawyers have articulated that staking rewards are created property, and therefore the IRS should tax rewards when they’re sold, the way all other created property – from bread a baker bakes to oil a company mines – is taxed. The IRS has indicated that it agrees, but has not adopted definitive policies. Along with other voices in the industry, we are calling on the IRS to confirm its guidance on how it plans to tax staking rewards.
In 2020, after working closely with the SEC, we developed and published recommendations for companies participating in proof of stake protocols to position staking as a service rather than a financial product. These principles – such as advising stake networks to avoid providing investment advice to participants or referring to staking as a profit opportunity, and instead encouraging them to highlight network participation and security – ensured that the SEC viewed and regulated staking networks as a service, like infrastructure providers instead of regulating the industry more strictly as a financial product provider. Read more at CoinDesk.