Proposed US bill wouldnt allow taxing block rewards at acquisition

If incorporated into U.S. tax law, the bill would require block rewards from proof-of-work and proof-of-stake networks to be taxed when sold rather than when they were acquired.

Two United States lawmakers have introduced a bill to clarify how Bitcoin (BTC) and crypto miners are taxed over block rewards.

In an April 30 announcement, Representatives Drew Ferguson and Wiley Nickel said they had introduced the Providing Tax Clarity for Digital Assets Act to the U.S. House of Representatives. The proposed legislation would specify that staking rewards would be considered created property under U.S. tax code, and taxes on block rewards would be collected at acquisition.

“The United States has long been the leader in innovation and technology yet is falling behind our foreign counterparts in providing tax clarity for the emerging digital asset industry,” said Representative Ferguson. “The United States treatment of digital asset rewards is overly complex – leading to confusion by investors, double taxation, and American businesses relocating overseas.”

Source: Representative Wiley Nickel

Crypto advocacy group Coin Center described the bill as having “sensible policies” by taxing block rewards from proof-of-work and proof-of-stake networks when sold or spent rather than when they were acquired. Sheila Warren, CEO of the Crypto Council for Innovation, called the legislation “right on point” for providing needed guidance.

“[B]lock rewards are more appropriately classified as value creation due to a users actions and efforts, rather than income from an employer,” said Coin Center. “This simple policy would resolve major issues with how cryptocurrencies are taxed today and put the technology on a level playing field.”

Related: Solo Bitcoin miner wins the 3.125 BTC lottery, solving valid block

The legislation came roughly 10 days after Bitcoin miner rewards dropped from 6.25 BTC to 3.125 BTC per block after the blockchains fourth halving event. Halvings have historically decreased the new supply of the cryptocurrency and eventually caused the price to surge. At the time of publication, the BTC price was $58,030, having fallen roughly 11% since the halving on April 19.