That was one perfectly fine possibility (the one that arguably made more sense). Unfortunately, the IRS finally released the rules it decided to make up. According to these, you must pay tax at the "fair market value" of the rewards at the time you gain control of them (i.e., are able to sell).
In retrospect, this makes sense in terms for slowing down crypto adoption: If you stake, you're forced to go into cash at some point. No longer can you transact purely in crypto. In terms of maximizing the IRS's gains, it makes less sense, at least if you expect crypto to behave the same ways as since the beginning in 2009.
In retrospect, this makes sense in terms for slowing down crypto adoption: If you stake, you're forced to go into cash at some point. No longer can you transact purely in crypto. In terms of maximizing the IRS's gains, it makes less sense, at least if you expect crypto to behave the same ways as since the beginning in 2009.
We can't stop people from selling their crypto to Fiat. After all, the majority wants to make money. Holding crypto without selling is something that only a true believer would do. If you don't sell, there's no reason for the government to collect taxes from you. However, you'll be tempted to sell when you need the money to buy things you can't spend your crypto on. That's when you need to pay your taxes.
I have no problem with crypto taxation as long as it's done fairly. At least, the US doesn't charge as much taxes as India does.
