On January 30, Bison Trails and Coinbase Custody announced via a press release that they are the newest members of the Proof of Stake Alliance (POSA). This group, which was founded in 2019, is actively advocating for the establishment of clear and firm regulations on staking profits, as well as for other innovation initiatives.
POSA organizes events and engages in congressional and regulatory conferences and discussions to promote staking-friendly regulatory guidelines. The main objective of the advocacy group is to change the taxation system for staking proceeds.
Currently, staking and mining rewards are classified as a form of direct income in the United States. This category incurs a higher tax rate compared to capital gains tax, which is usually applied to traditional assets. A University of Virginia professor, Abraham Sutherland, drafted a white paper wherein he condemned this unfair treatment.
Notably, the group is now focused on addressing how token holders’ staking rewards are being taxed. They aim to differentiate the tax treatment to staking rewards over Bitcoin’s (BTC) mining guideline. The group targets the staking profit to be taxed based on the disposition of the underlying asset (the reward’s sale) and not for the receipt.
Both Bison Trails and Coinbase Custody provide their customers with means for asset staking. As per the press release, the new members who have deep connections with the staking ecosystem would help lobby for the amendment of the existing tax regime. They are also expected to meet with financial and tax regulators such as the FinCEN and the US SEC to address the issues related to money services and securities.
In particular, the two companies would connect with congressional representatives and educate them about Proof-of-Stake technologies, particularly about the potential benefits they can bring. Notably, such efforts would lead to the establishment of a clear regulatory framework that would ultimately catalyze massive adoption of staking-based technologies.