IRS Reaffirms Cryptocurrency is Property, Not Currency: What It Means for Users

The US Internal Revenue Service (IRS) has reaffirmed its stance that cryptocurrency is considered property, not currency. This classification affects how users mine, spend, sell, swap, and stake digital assets.

According to the Congressional Research Service (CRS) report released on September 2, the IRS treats staking rewards and mining payouts as ordinary income. This means that users owe income tax on the Fair Market Value (FMV) from the moment they receive crypto tokens in their wallets.

The classification also applies to other use cases, such as selling a crypto token or swapping one for another. In these scenarios, users are liable for capital gains tax, similar to traditional property transactions.

A proposed legislative package is moving through the US House Ways and Means Committee that could change this regime. If passed, it would allow crypto miners and stakers to defer income recognition, treating newly minted or received validation tokens as self-created property rather than an immediate cash payout.