Hey guys! I understand your frustration with the staked and staking classifications so just to clear this out from our standpoint:
all tokens that were staked=do not classify
all tokens that came as a reward for staked tokens=staking
The reason why we don’t have more strict guidelines is because there aren’t any and they are subject to the interpretation of the different jurisdictions. That bein said, here is an article from Bloomberg providing further context on the matter:
Now, the lender could be considered to have converted their crypto for another crypto when they “stake” their money into the liquidity pool and received another token they can sell elsewhere. That is a taxable event, so in this example, just as dividends are taxable, so are tokens generated from staking activities.
However, it’s not as straight-forward as that because this transaction can also be viewed in another way; in that what the lender deposited in the liquidity pool is still their money and the tokens they receive in exchange is nothing more than a receipt. That means it is not a taxable event.
Meanwhile, on the borrower’s side, it can be argued that depositing collateral and receiving a loan in a different token form is akin to an exchange transaction, so a taxable event. Of course, usually taking a loan is not a taxable event. However, the transaction on a DeFi is unique. Unlike conventional loans, it includes depositing one currency as collateral to receive a loan in another.
If you need any tax assistance with your crypto taxes, make sure you visit ACTAN in the Hub where any of our crypto tax professionals can help you out.
Also consider the following:
Liquidity Pools: below is a link to a blog post about the topic, staking pools would be handled the same way as liquidity pools.
Hey @Matt , in @Trobriand 's case, he wants to make sure that the deposit and withdraw do not count as taxable events. How do we mark both transactions to not be taxable, besides ignoring both of them? You could argue that crowdloans are not taxable if their purpose is using the token to vote, rather than commit a financial transaction. I haven’t heard of anyone being taxed for proxy voting with shares of stock from a publicly traded company.
In the US, if you are performing crypto trades through a business, then the fees would become deductible business expenses. If you ignore the two transactions, then you lose track of deductible fees.