Tax Clarity Bill Aims to Lure Staking Infrastructure Back to US

Congress is working on a bill that could alleviate the tax burden on cryptocurrency staking rewards, which has driven many institutional clients offshore in search of clearer rules. H.R. 9175, the Tax Clarity for Mining and Staking Act, would allow miners and stakers to defer taxes on newly minted tokens until they are sold.

The current system treats staking rewards as taxable income from the moment they are received, regardless of whether they can be sold immediately. This has created a 'cash-flow penalty' that makes it difficult for validators to operate in the US, where the cost of electricity and land is high compared to other countries.

Jennie Levin, chief legal and operating officer at the Algorand Foundation, notes that this tax system creates a 'constant cash drag' on staking rewards. The bill would give taxpayers the option to treat newly minted tokens as self-created property, deferring recognition until they are disposed of.