Weekly Cryptocurrency Regulation Summary: Fed hints at new crypto banking model, staking tax faces criticism

As the final regulatory roundup for 2025, this week’s developments mark a turning point in U.S. crypto policy, marking a shift from ad hoc enforcement to more structured discussions around taxation, banking access, and investor protection.

From new pressure on the IRS over staking taxes to the Federal Reserve exploring new account models for payment companies, regulators are faced with how digital assets can be integrated into financial frameworks designed for a very different era.

Lawmakers renew their push for handling of staking taxes

A bipartisan group of 18 members of the U.S. House of Representatives has called on the Internal Revenue Service to reconsider how crypto staking rewards are taxed, arguing that the current interpretation amounts to double taxation and inhibits participation in blockchain networks.

In a letter to Acting IRS Commissioner Scott Bessent, the group, led by Representative Mike Carey, called the existing guidance a “burden” and called for a review by 2026.

A common interpretation is that staking rewards are treated as taxable income at the time they are received based on the then-current market price, and are taxed again when sold at a profit.

Lawmakers argue that this approach does not reflect real economic benefits, especially in volatile markets where the price of tokens can fluctuate rapidly between receipt and sale. “This letter simply calls for fair tax treatment of digital assets,” Carey said, adding that taxing compensation only when sold would be a meaningful step toward clarity.

The new pressure highlights a broader debate about whether staking should be treated like earned income or more like the appreciation of underlying assets, an issue that remains unresolved as staking becomes central to proof-of-stake networks.

Fed seeks new access to payment rails

Separately, the Federal Reserve has begun talks that could reshape how companies specializing in cryptocurrencies and payments interact with the U.S. banking system.

The Fed is seeking public comment on the proposed Payment Account. This “payment account” is a limited-use central bank account designed to parallel, but be distinct from, traditional master accounts used by banks.

The proposal represents an increasing strain on the Fed’s existing framework as fintech and crypto companies seek direct access to payment rails without being involved in lending or accepting deposits.

The Fed appears to be considering how to accommodate new business models while maintaining the safeguards tied to full-service banking by creating customized account models.

A 45-day comment period after publication in the Federal Register suggests regulators are still considering it. However, just considering such accounts signals a recognition that as digital and tokenized payment systems expand, denying access entirely may no longer be sustainable.

SEC targets fraud disguised as innovation

Although the tax and banking debate focused on structural reform, enforcement remained strong. The U.S. Securities and Exchange Commission has accused a network of fake crypto trading platforms and so-called AI investment clubs of orchestrating a $14 million retail fraud.

According to the SEC, companies including Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and several AI-branded investment clubs used social media ads, messaging apps and fabricated products to lure investors into what regulators called “investment confidence fraud.”

The incident shows deep-seated concerns about regulation. While legitimate crypto companies seek clearer rules, bad actors continue to exploit the hype surrounding AI and digital assets to target retail investors. For regulators, such enforcement actions remain an important justification for maintaining a strong stance on consumer protection.

Arizona tests the limits of state-level crypto tax policy

At the state level, Arizona lawmakers have introduced new efforts to create a more permissive tax environment for digital assets. The proposal, sponsored by state Sen. Wendy Rogers, would exempt some cryptocurrencies from taxes and prohibit local governments from imposing fees on blockchain node operators.

One bill would remove cryptocurrencies from state taxation, and the other would prohibit cities and counties from taxing node operations. Another proposed constitutional amendment would explicitly exclude cryptocurrencies from property taxes, but would require voter approval in November 2026.

The effort highlights the tension between state-level experimentation and broader fiscal realities. Arizona currently imposes a flat income tax of 2.5% and a trading privilege tax that averages over 8.5% when local rates are included, making full “tax-exempt” status politically and financially complex.

Regulatory status still in progress

This week’s developments indicate that the regulatory landscape is in transition. Policymakers are increasingly focused on aligning cryptocurrencies with existing financial principles (fair taxation, controlled access to payment systems, investor protection), but are still grappling with the extent to which existing rules apply.

As staking, tokenized payments, and crypto-native infrastructure mature, the pressure on regulators to move from interim fixes to durable frameworks will only increase.

The post “Weekly Crypto Regulation Summary: Staking tax comes under fire as Fed hints at new crypto banking model” was first published on Crypto News.

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