US crypto tax bill leaves out mining and staking tax deferral

The US House Ways and Means Committee will consider a 114-page crypto tax package on Wednesday. The package leaves out a proposed tax deferral for mining and staking rewards. The Digital Asset Tax Certainty Act, H.R. 10357, was published alongside the committee’s markup notice on Monday. The omitted provision appeared in Representative Mike Carey’s Tax Clarity for Mining and Staking Act, which he introduced in June. That provision would have allowed taxpayers to recognize newly created tokens as income when received. It also would have allowed taxpayers to treat the tokens similarly to self-created property and pay tax when the tokens were sold. Without the provision, mining and staking rewards would remain taxable when received or brought under the recipient’s control. This timing could occur before the rewards are sold for cash. The package would classify income from blockchain validator activities as ordinary income. It would establish whether that income is sourced inside or outside the United States. It would allow qualifying investment trusts to stake digital assets without losing their trust status. The package would prevent taxpayers from recognizing gains or losses when crypto is used to pay network or transaction fees of up to $10. It proposes special tax treatment for qualifying US dollar stablecoins. It would allow qualifying digital asset loans without treating them as taxable sales. It would offer simplified accounting for widely traded crypto assets. It would extend wash-sale and constructive-sale rules to crypto. It would establish a voluntary disclosure program for taxpayers seeking to correct earlier digital asset tax violations. The package comes as the Senate considers whether to advance the CLARITY Act. The CLARITY Act would determine how the US Securities and Exchange Commission and Commodity Futures Trading Commission divide oversight of the US crypto market. In June, the committee circulated seven crypto tax drafts before a hearing on digital asset taxation. The drafts covered stablecoins, mining, staking and measures aimed at reducing the tax-reporting burden from crypto transactions. The Blockchain Association, Crypto Council for Innovation and Digital Chamber urged Congress to pass Carey’s legislation as introduced. The groups argued that taxing rewards before they can be sold creates liquidity problems for miners and stakers. The groups opposed an amendment that would have limited the deferral to five years.