Why A 2023 IRS Rule Is Becoming A 2026 Crypto Tax Time Bomb On Capitol Hill

Benzinga2025-12-20

A group of Republican lawmakers is urging the Trump administration to repeal a 2023 IRS rule taxing cryptocurrency staking rewards, warning that the policy could lock in higher tax burdens for ...

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He and other lawmakers argue that staking rewards should be treated as newly created property and taxed only when sold, similar to capital assets.\"Network security and American leadership require taxpayers to stake those tokens,\" the letter stated, adding that administrative burden and potential overtaxation reduce participation.Senate Pressure Builds As WellSenator Todd Young of Indiana, a Republican member, has previously urged the IRS to review the 2023 staking guidance, according to Bloomberg.Young warned that the rule creates uncertainty for taxpayers and could complicate upcoming digital asset legislation.Democratic lawmakers have defended the IRS position, arguing that staking rewards function as compensation for services. Senator Tina Smith of Minnesota has said in past hearings that taxing rewards when received aligns with how other forms of compensation are treated under U.S. tax law.Institutional Stakes Rise As Products Add YieldThe debate has intensified as staking becomes more central to the cryptocurrency economy. Last month, the Treasury Department approved staking activity within certain Wall Street-traded cryptocurrency products.Industry lobbyists say reversing the guidance before year-end would give lawmakers more flexibility to draft a broader crypto tax framework in early 2026.Without action, they warn the existing rule could shape legislation by default.Read Next: \nEthereum Faces Uncertain 2026: The Missing Ingredient(s) To Catch BTC\nImage: Shutterstock$ETHEthereum$2987.425.69%OverviewMarket News and Data brought to you by Benzinga APIs© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.13","shortVersion":"4.35.13","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2592192182","isCrawlerRequest":true}