Blockchain Association, Crypto Council for Innovation, and Solana Policy Institute File Amicus Brief in Jarrett v. United States

Washington, D.C. (May 4, 2026) – On May 1, Blockchain Association (BA), Crypto Council for Innovation (CCI), and Solana Policy Institute (SPI) filed an amicus brief in Jarrett v. United States, a taxpayer challenge to the federal tax treatment of staking rewards. The brief urges the court to recognize that new tokens generated by staking are not income until sold, and therefore should not be taxed until they are sold or otherwise disposed of.

The case has significant implications for proof-of-stake networks, which rely on validators who commit digital assets to secure and operate decentralized systems in a process called staking. In return, validators may generate new tokens through the network’s protocol. The organizations argue that treating these newly created tokens as taxable income at the moment of creation mischaracterizes how the technology works and would discourage participation in this critical activity.

The organizations emphasize that staking plays a critical role in maintaining the security and integrity of blockchain networks, which are increasingly being integrated into legacy financial markets. Misaligned tax policy disincentivizes participation by U.S.-based validators, concentrating network activity in other jurisdictions and weakening the resilience of these systems.

“New tokens generated by staking are not payments – they are newly created property generated by participants who help secure blockchain networks,” said Ashok Pinto, Executive Vice President of Legal and Government Relations, Blockchain Association. “Taxing those rewards before they are ever sold is inconsistent with longstanding tax principles and creates unnecessary barriers to participation in these networks. Getting this right is essential to ensuring the United States remains competitive in the next generation of financial infrastructure.”

"More than $700 billion of value is now secured by proof-of-stake networks, and American stakers play a critical role in keeping those networks decentralized and secure,” said Alison Mangiero, Chief Strategy Officer and Head of U.S. Policy, Crypto Council for Innovation. “Taxing rewards the moment they're created — before any sale — pushes that activity offshore, weakening the very infrastructure that stablecoins, digital identity systems, traditional financial markets, and other critical sectors are beginning to run on. That's a result no sound tax policy should produce."

“In addition to being wrong on the law, a rule that taxes new tokens at the time of creation creates serious administrability issues for taxpayers and the IRS alike,” said Patrick Wilson, General Counsel, Solana Policy Institute. “These tokens may be generated frequently, in small increments, and at varying market prices, making valuation and reporting unnecessarily burdensome before any sale occurs. A disposition-based rule is more workable and better aligned with how proof-of-stake networks operate."

The brief further explains that taxing staking rewards at creation introduces liquidity challenges for participants, discourages network participation and therefore inserts security risks, and pushes innovation and infrastructure development offshore. By contrast, taxing newly created tokens upon sale better aligns with existing tax law and the economic realities of proof-of-stake systems.

The amicus brief calls on the court to reject the IRS’s current interpretation and instead apply longstanding tax principles that distinguish between newly created property and income derived from an external source.

About Blockchain Association

Blockchain Association is the leading nonprofit organization dedicated to promoting a pro-innovation policy environment for the digital asset economy. We work with our members to educate policymakers about blockchain technology and its ability to pave the way for a more secure, competitive, and consumer-friendly digital marketplace. Our mission is to advance the future of crypto in the United States, promoting the potential of blockchain technology and shaping policy that ensures its success.

About Crypto Council for Innovation

The Crypto Council is the premier global alliance for advancing innovation. It believes in leading with a global view, advocating for inclusive regulation, and developing evidence-based insights to support government and business leaders. It has teams in Washington, D.C., New York, San Francisco, Brussels, London, and Hong Kong.

About Solana Policy Institute

Solana Policy Institute is a non-partisan, non-profit focused on educating policymakers on how decentralized networks like Solana are the future of the digital economy—and why the people building on and using them need legal certainty to flourish.