It has been just revealed the fact that the IRS notes the fact that the staking rewards will be taxed as income. Check out the latest reports about this below.
IRS and staking rewards latest news
According to the IRS, individuals in the US who earn staking rewards through cryptocurrency trading must now consider such earnings as part of their taxable income for that year.
Staking involves investors locking their crypto assets into the blockchain to validate transactions and gain rewards.
The IRS clarifies that if a cash-method taxpayer stakes native cryptocurrency to a proof-of-stake blockchain, and receives additional units of cryptocurrency as rewards, the fair market value of such validation rewards will be included in their gross income for the taxable year in which they gain control over them.
The fair market value is determined as of the date and time of validation reward control.
Furthermore, if a taxpayer stakes crypto via an exchange, they must also include those rewards in their gross income for the taxable year.
Jesse Powell, the co-founder of the crypto exchange Kraken, says on Twitter that the ruling is “disappointing.”
The ruling is disappointing as it does not consider the impact of inflation and the consequences of not staking.
The rewards are divided based on the effort you put in to claim them. If no one stakes, the chain becomes obsolete and the value of all coins diminishes.
Furthermore, if you do not stake, your percentage of ownership and voting power decreases.
When it comes to the price of Bitcoin, it’s still down by almost 58% from its all-time high of over $69,000 in November 2021.
TechDev has also noticed that the altcoin market cap chart has been compressed to its highest level ever seen in the past three weeks. Additionally, the Bollinger bands width for Bitcoin is currently hovering just above 0.50, which is a relatively low level.