Out of 31 nations, only five have tax guidance addressing cryptocurrency rewards via staking, a study found.
The U.S.
Library of Congress’ law division has released a report that shows major
differences across global jurisdictions on the taxation of
cryptocurrency gains based on how assets are obtained.
The 124-page report
penned by foreign law specialists, titled “Taxation of Cryptocurrency
Block Rewards in Selected Jurisdictions,” was announced Wednesday by
U.S. Rep. Tom Emmer (R-Minn.).
Building on the Library’s previous research on
cryptocurrency regulation, the latest study comprises a comparative
analysis of 31 different nations’ regulatory approaches to
cryptocurrency taxation.
Specifically,
the study casts an eye over jurisdictions that tax those who obtain
mining block rewards versus proceeds obtained via staking. The report
also assesses the tax implications of new tokens obtained via free
distributions called airdrops and blockchain splits, or hard forks.
The
study found that while tax departments in a number of the 31 countries
have published guidance on the taxation of mined tokens, only a handful
directly address the taxation of new tokens obtained via staking. An
alternative to mining, staking is committing crypto assets for a period
to support the functioning of a blockchain network in return for
rewards.
The
disparity arises because more recently a number of projects have moved
from a proof-of-work (PoW) consensus mechanism – aka mining – to a
proof-of-stake (PoS) model, and countries are playing catch-up,
according to the report.
More guidance needed
Emmer,
who is co-chair of the Congressional Blockchain Caucus – a bipartisan
group of lawmakers studying blockchain technology in conjunction with
industry – said greater guidance was needed to implement a “proper path
forward.”
“In
order for these technologies to thrive and reach their revolutionary
potential we must have the knowledge and organizational landscape of the
approaches to regulation,” said Emmer in a press release on Wednesday.
Out
of the 31 nations, 16 have been identified as possessing specific rules
or guidance on the applications of various major taxes such as income,
capital gains and value-added tax when it came to mined tokens.
Those
include Australia, Canada, Denmark, Finland, France, Germany, Israel,
Italy, Japan, Jersey, New Zealand, Norway, Singapore, Sweden,
Switzerland and the U.K.
Most
of the countries listed above provide different tax treatment to
small-scale cryptocurrency mining conducted by individuals, often
treated as a hobby, then large scale commercial operations.
Meanwhile,
the number of countries that address the taxation of tokens obtained
via staking stands at just five: Australia, Finland, New Zealand, Norway
and Switzerland.
“How
nations tax the people who maintain cryptocurrency networks will
obviously have a big effect on attracting or repelling innovators and
investment,” said Abraham Sutherland, legal adviser to the Proof of Stake Alliance. “The results are all over the board.”
Sutherland
went on to say the “critical first step” is to establish clarity around
block rewards and when they are taxed. He said tokens should be taxed
when they are sold, not when they are first acquired such as can be the
case with new property.
“This will both reduce administrative headaches and ensure that people are not overtaxed.”
source link : https://www.coindesk.com/library-congress-report-staking-mining-tax
