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Home»Regulation»Taxes come under fire as Fed hints at new crypto banking model
Regulation

Taxes come under fire as Fed hints at new crypto banking model

December 26, 2025No Comments
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While the latest regulatory roundup of 2025, this week’s developments marked an inflection point for U.S. crypto policy, showing a move away from one-off enforcement and toward more structural debates over taxation, banking access, and investor protection.

Whether it’s renewed pressure on the IRS over staking taxes or the Federal Reserve exploring new accounting models for payment companies, regulators are grappling with how digital assets can be integrated into financial frameworks designed for a very different era.

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A bipartisan group of 18 US lawmakers urged the Internal Revenue Service to review how crypto staking rewards are imposed, arguing that current interpretations amount to double taxation and discourage participation in blockchain networks.

In a letter sent to Acting IRS Commissioner Scott Bessent, the group, led by Rep. Mike Carey, called the existing guidance “burdensome” and called for a review before 2026.

Under prevailing interpretations, staking rewards are treated as taxable income when received, based on their market value at that time, and are then taxed again if sold at a gain.

Lawmakers say this approach does not reflect real economic profit, especially in volatile markets where token prices can fluctuate sharply between receipt and sale. “This letter simply calls for fair tax treatment for digital assets,” Carey said, adding that taxing rewards only when they are sold would be a significant step toward clarity.

This renewed pressure highlights a broader debate over whether staking should be treated as earned income or rather as unrealized asset appreciation – a question that remains unresolved as staking becomes more central to proof-of-stake networks.

Separately, the Federal Reserve has opened a consultation that could reshape how crypto and payments-focused companies interact with the U.S. banking system.

The Fed is seeking public comment on a proposed “payment account,” a limited-use central bank account designed to accompany — while remaining distinct from — the traditional main account used by banks.

The proposal shows increasing pressure on the Fed’s existing framework, as fintechs and crypto companies seek direct access to payment channels without committing to lending or deposits.

By creating a tailor-made account model, the Fed appears to be considering how to adapt to new economic models while preserving the guarantees associated with full banking service.

The 45-day comment period, following publication in the Federal Register, suggests that regulators are still in an exploratory phase. But even considering such accounts means recognizing that denying access altogether may no longer be sustainable as digital payments and tokenized settlement systems grow.

While tax and banking debates have focused on structural reform, enforcement of these reforms remains firmly in play. The U.S. Securities and Exchange Commission has indicted a network of fake crypto trading platforms and so-called AI investment clubs, accusing them of orchestrating a $14 million retail fraud.

According to the SEC, entities such as Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd. and several AI-branded investment clubs used social media advertising, messaging apps and manufactured products to lure investors in what regulators described as an “investment trust scam.”

The case shows continued regulatory concern: While legitimate crypto companies are pushing for clearer rules, bad actors continue to exploit the hype around AI and digital assets to target retail investors. For regulators, coercive measures like this remain a key justification for maintaining a hard line on consumer protection.

At the state level, Arizona lawmakers have introduced a new attempt to create a more permissive tax environment for digital assets. Proposals backed by State Senator Wendy Rogers would exempt virtual currency from certain taxes and prohibit local governments from imposing fees on blockchain node operators.

One bill would remove virtual currency from state taxation, while another would prevent cities and counties from taxing node operations. A separate constitutional amendment would explicitly exclude crypto from property taxes, but would require voter approval in November 2026.

This effort highlights the tension between state-level experimentation and broader budgetary realities. Arizona currently levies a flat 2.5% income tax and a transaction privilege tax that averages more than 8.5% once local rates are included, making a fully “tax-exempt” status politically and fiscally complex.

This week’s developments illustrate a regulatory landscape in transition. Policymakers are increasingly working to align crypto with existing financial principles – fair taxation, controlled access to payment systems and investor protections – while questioning how far existing rules can extend.

As staking, tokenized payments, and crypto-native infrastructure mature, the pressure on regulators to move from stopgap solutions to sustainable frameworks will only increase.

Read original story Weekly Crypto Regulation Roundup: Putting Taxes Under Fire as Fed Hints at New Crypto Banking Model by Tanzeel Akhtar on Cryptonews.com



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