Crypto tax situation - Read post 1 for thread banned users

I think it's from first principles.

As far as I understand staking — which, to be fair might not be very far — it works like this:

• To engage in crypto staking, you have to actually own some crypto.
• You commit to making your crypto available to help support the operation or security of a blockchain network.
• While this commitment continues, your crypto is effectively locked up. You can't use it for other purposes, e.g. by trading it.
• You do this in the hope or expectation of reward — effectively, you're paid for the use of your crypto. The reward could be in cash, or it could be in an allocation of additional crypto
• The reward is somewhat variable — there's an element of randomness in when, or how often, your staked crypto is actually use for the purpose for which you have made it available, and in how much is generated by each use of the crypto, and this in turn means there's an element of randomness in the reward.
• Losses are possible.

As we know, there are few or no tax regulations that apply to crypto specifically; transactions involving crypto are taxed under the general rules that apply to transactions involving other assets.

With crypto staking, effectively you're earning money by making your asset available to others to use. In economic terms, it's not that different from lending money, or hiring out plant and machinery. You could argue that your staking income is taxed on this basis, in which case it's subject to income tax as "miscellanous income" under Taxes Consolidation Act 1997 Schedule D Case IV.

But one difference from a typical renting-out is that the return you earn is to some extent dependent on how your staked crypto is used — you have an interest in the use made of your crypto to support the system, and you participate the amounts generated by that use. On this view you're not really renting out your crypto — you're letting it be used on your behalf in operations that support the system, and also generate a return that you will receive a part of. If you take that view, then crypto staking is an "adventure in the nature of a trade", and the amount you earn is subject to income tax under Schedule D Case I.

If you want to know which of these applies, you can seek a ruling from the Revenue Commissioners. But it makes no difference in terms of the amount of income tax you will owe.

It's hard to argue that staking income should be subject to CGT, because CGT arises on the disposal of an asset, and with staking there is no disposal — at the end of the staking period, you still own your crypto.