Accounting for staked assets: Understanding the process

Over the years, the Securities and Exchange Commission (SEC) has revised its approach to regulating digital assets. But one thing's for sure in 2025: If you fail to pay your crypto taxes, it’s safe to say the IRS won't overlook it.

While IRS regulations clearly require traders to report all capital gains from cryptocurrency transactions, some aspects of blockchain activity still fall into a gray area when it comes to tax liability. For many investors, that includes accounting for staked assets.

To help clear things up, this guide explains the key principles of accounting for staked crypto, including how staking rewards are classified, reported, and taxed.

What are staked assets?

In the decentralized world of blockchain, networks rely on consensus mechanisms to maintain coherence across their global network of nodes. The two most common consensus mechanisms are proof-of-work (PoW), used by Bitcoin (BTC), and proof-of-stake (PoS), used by Ethereum (ETH), Solana (SOL), and Cardano (ADA).

Proof-of-stake blockchains allow users to lock up, or “stake,” their assets to participate in the consensus process and support blockchain operations – an approach that carries some level of risk. To compensate for this risk and encourage honest participation, traders receive staking rewards, typically in the same asset.

Think of crypto staking rewards like earning interest on a savings account. Just as banks issue a Form 1099-INT when you earn more than $10 in interest, all income from staking must be reported and taxed. However, since blockchain networks don’t generate tax forms, and staking continues to grow as a passive income strategy in crypto, it’s up to each individual to accurately track and report their staking income.

How to account for staked assets

When accounting for staked assets, there are four key events to consider: 

• Initial recognition: When a digital asset intended for staking is purchased, the purchase price, amount acquired, and amount staked must be recorded for accurate bookkeeping. Once staked, the “entity” – whether a business, an organization, or individual – retains ownership and control of the assets, as no other party can direct their use.
• Staking rewards: These are tokens awarded to participants in the staking process who help validate blockchain transactions. Rewards are typically paid out in the blockchain’s native token, and the amount and value of the tokens must be recorded when they are claimed and come under the entity’s control.
• Revaluation of staked assets: Revaluing digital assets is an important aspect of financial reporting because it adjusts the book value to reflect current market value. This ensures that stakeholders have accurate information for tax reporting or evaluating whether to continue holding the asset.
• Sale or disposal of staked assets: The sale or disposal of a staked asset is also a reportable event. When selling staked assets, businesses and investors must record how much they received to determine whether they made a profit or loss. The original purchase price and number of tokens acquired help calculate the total value of what was sold. However, the reporting requirements depend on whether the seller is classified as an individual investor or a business under International Financial Reporting Standards (IFRS).

How to account for staked assets on the balance sheet

Accounting for staked assets on the balance sheet can be done in two primary ways – as assets or as indefinite-lived intangible assets:

• Assets: If a cryptocurrency is held for investment or used in a company’s operations, the Financial Account Standards Board (FASB) considers it an asset. In this case, it should be recorded at its current market value, also known as fair value. Any change in fair value is reported as an unrealized gain or loss, in line with ASU 2023-08, which provides updated guidance for the accounting of crypto assets.
• Indefinite-lived intangible assets: Many classify cryptocurrencies as indefinite-lived intangible assets since they are non-physical. However, for this classification to apply, the cryptocurrency must not be used directly in a company’s operations or held for investment purposes. In such cases, it should be reported on the balance sheet at cost, net of any impairment losses.

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Staking under different accounting standards

Varying accounting standards across jurisdictions add another layer of complexity to tracking crypto rewards from staking.

Under International Financial Reporting Standards (IFRS), accountants typically classify staked assets as intangible assets or, in some cases, inventories. Existing IFRS guidance, including IAS 38 (Intangible Assets) and IAS 2 (Inventories), states that digital assets do not qualify as cash and cash equivalents, financial assets at fair value through profit or loss, or investment property.

One key distinction between IFRS and US GAAP is how each treats impairment. Under IFRS, it’s possible to write an impaired intangible asset back up to its original cost if the value recovers. In contrast, US GAAP prohibits reversing impairment losses – the asset’s value can only increase again through a sale.

Since most classify staked crypto as an intangible asset, accountants measure its value at cost when the staking agreement begins. They also record staking income upon receipt as a noncash transaction.

Revenue vs. other income under IFRS 15

Under IFRS 15, which governs Revenue from Contracts with Customers, the classification of staking rewards depends on contract terms, the cryptocurrency involved, and the blockchain’s structure. The key distinction lies in how staking rewards are earned – whether independently or through a staking pool – which determines whether they’re classified as revenue or other income.

• Other income: If an entity operates as a solo validator (meaning they run a node and validate transactions independently), staking rewards are typically classified as other income.
• Revenue: If a validator operates within a staking pool, they may be classified as a service provider to the pool operator, meaning their rewards are considered revenue.

Since validation requires specialized equipment and a time commitment, many opt to stake their assets with trusted validators rather than running their own nodes. These participants, known as delegators, receive staking rewards classified as revenue under IFRS. Their rewards may also qualify as revenue from a contractual agreement with a customer.

Staking under U.S. GAAP

Under U.S. Generally Accepted Accounting Principles (GAAP), staking rewards are considered a noncash investing activity on the Statement of Cash Flows, similar to stock dividends. The income generated from staking is treated as revenue and should be recorded accordingly.

When an individual or entity gains control over staking rewards, the value of the tokens received is recorded as income at fair market value at the time of receipt. If the assets are later sold, any change in fair value is recorded as a capital gain or loss for tax purposes.

Disclosure requirements and reporting challenges

Regardless of whether GAAP or IFRS standards apply, financial statements always need to include detailed disclosures on valuation methodologies, reward recognition policies, and income accrual estimates. Both standards require different evaluation methods for validators and delegators, but the lack of clear regulations for crypto assets continues to complicate reporting.

Challenges of applying IFRS 15 to staking rewards

There are two main challenges when applying IFRS 15 to staking rewards: 

Noncash compensation

Since stakers usually receive rewards in the blockchain’s native token, they qualify as noncash consideration. Under IFRS 15, noncash consideration is measured at fair value at contract inception. This means staking reward revenue is determined based on the fair value of the tokens at the time they were initially locked up. Any difference between the fair value at the onset of staking and the fair value at the time of reward distribution does not affect recognized revenue.

Fluctuations in staking rewards

Rewards earned from staking can fluctuate based on factors such as network activity, which can make it difficult to project how much will be earned, subjecting reporting entities to constraints outlined in IFRS 15 regarding variable consideration. In these situations, the constrained amount is excluded from the transaction price and is not recognized as revenue until the staking rewards are in the entity’s possession.

Optimize your crypto tax strategy with CoinTracker

Keeping up with evolving crypto tax laws can be challenging for even the most informed investors. Fortunately, CoinTracker provides the latest tax information for all trading situations, including comprehensive guides on staking and crypto rewards.

With integrations across hundreds of centralized and decentralized exchanges and crypto wallets, CoinTracker’s Portfolio Tracker makes it easy to monitor your crypto investments, staking activities, and profit/loss changes. 

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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.