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Proof of Stake Alliance
Proof of Stake Alliance

Coinbase Custody and Bison Trails Join Proof of Stake Alliance

Proof of Stake Alliance (POSA), a community-driven advocacy organization for Proof of Stake (PoS) technology, announced the addition of Coinbase Custody and Bison Trails to the alliance. Coinbase Custody, a provider of secure, institutional-grade offline storage solutions for the digital asset ecosystem, and Bison Trails, a leading provider of blockchain infrastructure, expand the diverse group of POSA members engaging with and educating regulatory and policy stakeholders.

The Proof of Stake Alliance is an advocacy group founded in 2019 and featuring more than 18 members. It engages in regulatory and congressional discussions to promote staking-friendly regulation, as well as organizing events and educational initiatives. Their mission is:

  • Bring legal and regulatory clarity to Proof of Stake technology to better protect consumers, technologists and further promote innovation in the United States.
  • Foster collaboration among participants that utilize or interact with proof-of-stake technologies to educate regulators, stimulate dialogue across constituents and stakeholders, evangelize Proof of Stake, and clarify legal and regulatory frameworks.
  • Increase adoption of Proof of Stake networks by (i) promoting and sustaining decentralization of networks (as it lowers the barriers to entry relative to Proof of Work), (ii) reduce energy consumption, and (iii) promote active participation in networks by tokenholders.

As COO at Polychain Capital and POSA board member Matt Perona explained the organization’s primary goal is to change the taxation regime for staking rewards:

“First, POSA is working to address how staking rewards received by token holders are taxed. POSA is currently trying to differentiate tax treatment from bitcoin mining guidance so that staking rewards are taxed on the disposition of the asset (the sale of the reward) as opposed to the receipt.”

“Proof of Stake is an increasingly important innovation that the crypto space as a whole is rapidly trending toward,” offered Sam Mcingvale, CEO, Coinbase Custody. “POSA is playing a critical role by engaging with lawmakers and regulators to educate them on emerging POS technology. It’s our hope that through the work of organizations like POSA, we’ll start to see meaningful conversations and, in time, clarity when it comes to POS and its applications.’

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Both mining and staking rewards are currently taxed in the U.S. as direct income, which offers a much higher rate than capital gains tax normally reserved for traditional assets.

The new members of POSA will be helping the alliance to amend this regulation, as both organizations are deeply invested in the staking ecosystem by providing customers with the means to stake their assets.

A white paper drafted by Abraham Sutherland, a professor at University of Virginia School of Law, argues that the existing treatment is unfair.

In addition to its work on tax regulation, the alliance is also engaging with regulators such as the SEC and FinCEN to work on issues related to securities and money services regulation.

Both Coinbase Custody and Bison Trails will assist POSA in its initiatives. Replying to questions about their specific contribution, Perona explained:

“[They will conduct] meetings on the hill with congressional representatives educating them on Proof of Stake based technologies and their potential use cases. Meetings with regulators (SEC, IRS, Treasury, FinCEN) educating them on the intricacies of the technology and building a regulatory framework that allows for the growth and adoption of staking based technologies. Taking part in working groups and helping implement best practices industry standards”

The alliance’s educational efforts do not include institutions, however. When asked whether POSA is making efforts beyond regulator outreach, Perona replied:

“Currently, POSA is focused specifically on engaging with regulators and policymakers and trying to build a regulatory framework that is conducive to the growth of the staking industry. Our individual members might be having those types of conversations [with institutions] but POSA is not focused on that nor is it a function of POSA.”

About POSA:

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POSA represents innovators, academics, service providers, and industry professionals and addresses key areas of regulatory uncertainty provides a platform for the staking industry in the United States and drives engagement with policymakers. POSA is committed to educating and advancing policy discussions on behalf of the industry regarding tax and regulatory issues. For more information, visit https://www.proofofstakealliance.org/

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Jung Min-seo

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