According to a January 30 press release, Bison Trails and Coinbase Custody have joined the Proof of Stake Alliance (POSA). They will work with the alliance to advocate for the adoption of straightforward regulations on staking proceeds and other development initiatives.
POSA is an advocacy group that was founded in 2019. It comprises of over 18 members engaging in congressional and regulatory discussions to enhance staking-friendly regulation. It also organizes events and educational initiatives.
Matt Perona, POSA board member and COO at Polychain Capital, said that the organization’s main aim is to change the taxation regime for staking rewards:
“First, POSA is working to address how staking rewards received by token holders are taxed. POSA is currently trying to differentiate tax treatment from bitcoin mining guidance so that staking rewards are taxed on the disposition of the asset (the sale of the reward) as opposed to the receipt.”
Both staking and mining rewards are today taxed in the US as direct income. It results in a much higher rate compared to the capital gains taxes that are typically reserved for traditional assets.
The new POSA members will assist the alliance to amend the regulation. They will do so since both Coinbase and Bison Trails are heavily invested in the staking ecosystem. They provide their customers with a means to stake their assets.
According to Abraham Sutherland’s white paper draft, the existing treatment is unfair. Adding to its work on tax regulation, POSA is also interacting with regulators like the SEC and FinCEN to work to solve challenges related to securities and money services regulation. Perona explained:
“[They will conduct] meetings on the hill with congressional representatives educating them on Proof of Stake based technologies and their potential use cases. Meetings with regulators (SEC, IRS, Treasury, FinCEN) educating them on the intricacies of the technology and building a regulatory framework; that allows for the growth and adoption of staking based technologies, taking part in working groups and helping implement best practices industry standards.”
The alliance’s educational strategies do not feature institutions. When asked about POSA’s efforts beyond regulatory outreach, Perona explained:
“Currently, POSA is focused specifically on engaging with regulators and policymakers; and trying to build a regulatory framework that is conducive to the growth of the staking industry. Our members might be having those types of conversations [with institutions], but POSA is not focused on that, nor is it a function of POSA.”