"Tax it when you sell, not when you receive": Why the industry is fighting for the Tax Clarity for Mining and Staking Act in the U.S.

Recently, the U.S. Web3 community and the crypto industry have been speaking with one voice to send a strong message to Congress: they are pushing for the passage of the original 'Tax Clarity for Mining and Staking Act.' This isn't just about paying less in taxes. The current ambiguous regulatory environment is stifling the very infrastructure contributors who form the backbone of the blockchain ecosystem.

Under the current incomplete tax regime, miners and stakers face massive uncertainty, as they may be required to pay taxes the 'moment' they receive tokens as rewards. What happens if tokens are taxed at their value at the time of receipt before they are even liquidated, or worse, if the market price crashes? The moment taxes are levied on unrealized gains—value that hasn't been realized yet—network contributors are trapped in a vicious cycle where they are forced to sell their rewards just to cover tax liabilities.

This goes beyond the individual profitability of participants; it creates a fatal structural crack that undermines the security and consensus mechanisms of blockchain networks. In this article, we will examine why the global crypto camp is staking everything on this bill, and why the core mechanism of taxing at the 'point of sale' rather than the 'point of acquisition' is the key to the ecosystem's survival and America's global competitiveness.

Taxation at the 'point of sale,' not 'point of acquisition': The core mechanism of the bill

Currently, the U.S. cryptocurrency tax system imposes income tax on unrealized gains the moment a miner or staker verifies a new block and receives tokens as a reward—even before those tokens are sold.

Why is this structure fatal to network contributors and builders? It's due to the high volatility of crypto assets. It frequently happens that a token worth $10 at the time of receipt drops to $1 by the time taxes must be reported and paid. However, taxes are still levied based on the $10 value at the time of acquisition. Ultimately, contributors are forced to choose 'forced selling' of their rewards on the market to cover the taxes. This not only puts downward pressure on the market but also creates a vicious cycle that encourages long-term builders to leave.

The core mechanism of the proposed 'Tax Clarity for Mining and Staking Act' is very clear: it defers the taxation point from the 'moment of receipt' to the 'moment of sale' on the market.

The logic presented by the industry is both commonsensical and powerful. It follows the same principle that farmers are not taxed on their crops the moment they are harvested, nor are miners taxed on minerals the moment they are extracted. Crops and minerals are only taxed once they have passed through warehouses, entered the market, and been liquidated. The argument is that the products of a digital ecosystem—gained by committing computing power or assets to a blockchain network—should be treated with the same logic.

If this bill passes, contributors will no longer be forced to dump tokens due to tax burdens. It will create a stable environment where they can HODL (hold) for the long term, believing in the protocol's long-term vision. The normalization of taxation is the first step toward a virtuous cycle of network ecosystem stability and a healthy investment environment, which is exactly what this bill aims for.

Pushback from traditional finance and the need to stick to the original bill

However, there are many hurdles to clear before this bill can be finally passed. The biggest obstacle remains the pushback and opposition from traditional finance (TradFi).

Some in the traditional financial sector are questioning whether this bill provides 'excessive preferential treatment' that is unilaterally advantageous only to the crypto industry. From their perspective, staking rewards—which occur regularly, every week or every second—look similar to 'interest income' or 'dividends.' Since the principle in traditional asset markets is to tax interest or dividends as soon as they are received, they argue that deferring taxes on crypto assets until the point of sale hinders fair market competition.

However, crypto builders and industry coalitions think quite differently. They counter that rewards obtained through blockchain network verification should be viewed as 'manufacturing production activities' or 'crop harvests' rather than financial interest. Just as gold miners are not taxed the moment they find gold, and farmers are not taxed the moment they pick apples, they argue that staking and mining should be treated as the same act of creation, with taxation only occurring upon final liquidation on the market.

This is precisely why industry coalitions are fighting for the 'passage of the original bill without amendments.' If a weak compromise is accepted under pressure from traditional finance, it would not only dilute the bill's core intent but also create further complex exceptions and ambiguous standards, ultimately adding to regulatory confusion. The community's consensus is that only by holding firm to the original bill without compromise can they provide tangible business predictability for Web3 infrastructure contributors.

U.S. global competitiveness and variables to watch

Ultimately, this bill will be an important litmus test for whether the U.S. can retain global blockchain infrastructure and builders. If the bill is delayed or falls through, the exodus of major mining companies and validators abroad could accelerate. Ecosystem participants need to continuously monitor whether Congress will pass the bill as originally intended, despite the pressure from the traditional financial sector.