IRS Calls Crypto Staking Taxable in Response to Legal Challenge

Staking a cryptocurrency should induce a tax liability as soon as it is done, the US government says.

The IRS rebuffed a suit brought by Joshua Jarrett, a cryptocurrency investor who has sued in the US District Court for the Middle District of Tennessee. The suit involves the tax treatment of staking, a process that generates new tokens through using both existing tokens and computing power to validate currency transactions.

It denied in the Dec. 20 response that staking creates new property and said that Jarrett should have to pay taxes on the value of tokens upon receipt.

“Revenue Ruling ...