Cryptocurrency still faces regulatory vagueness in the majority of places worldwide. Nevertheless, nations such as the United States have started taking steps to launch stronger regulation but there are still some challenges.
People who reported their virtual currency transactions inappropriately received educational letters from the IRS. It is also pointing to muddy waters regarding cryptocurrency taxes.
In recent times, discussions concerning how transactions in Proof of Stake (PoS) protocol are treated have become widespread. The IRS issued virtual currency guidance in 2014 and it is the pioneering step toward improved regulatory comprehension concerning cryptocurrency.
However, the IRS updated the guidelines last year and there are many questions to be answered. The guideline released in 2014 noted the inclusion of mining rewards and the amount in terms of “the fair market value of the virtual currency” in individual’s gross income. Notwithstanding, the guidelines focus particularly on the Proof of Work system and are still vague regarding different treatments for staking rewards from PoS.
The need for enhanced regulatory development by government agencies prompted advocacy groups such as the Proof of Stake Alliance to add new members such as Coinbase Custody and Bison Trails to provide critical inputs capable of shaping tax and regulatory policy.
Nic Carter of Castle Island Ventures recently spoke on an episode of the On the Brink podcast. He discussed issues regarding the Proof of Stake tax policy. He stated that there is no regulatory clarity in the crypto space. He highlighted the existence of flaws in IRS’s guidance on cryptocurrency and that people do not discuss Proof of Stake tax concerns.
Carter maintained that the tax is not efficient, adding that it would not favor proof of stake chains. He mentioned the possibility of the proposal of the presidential candidate, Andrew Yang, to enhance the industry’s status. Andrew Yang proposed a federal cryptocurrency regulatory framework.
Although people have been critical about the IRS’s taxation steps, what is happening in the US appears to be quite hopeful compared with several other countries.
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