Business bank for staking rewards + taxation


I’m running a stake pool as a business, and the pool got its first rewards at the beginning of epoch 217.
I need to withdraw some of the rewards to pay for hosting fees, etc. but my current bank rejects transfers to/from crypto related services. I’ve previously used Etana to get around that, but its a bit of a tedious extra step. I’ve also tried services such as Revolut and TransferWise, but they do not allow crypto related transfers either, and MisterTango is way too pricey.

Does any of you have some recommendations to a bank / EMI that could be used? Preferably a service which also offers a Visa or Master debit card? Or how are you withdrawing your rewards to fiat to pay for hosting fees?

And regarding accounting/taxation, I’ve read that the correct way to tax the rewards, is to tax the value of the ADA at the point in time where they were rewarded. so I guess the most safe thing to do, is to convert all the rewards to fiat, when they are rewarded, to avoid price fluctuations resulting in not being able to pay the tax of the value of the ADA. For example

  • The price of the rewarded ADA in epoch 217 was approx 0.98$
  • If some rewards are withdrawn at the end of year, to pay tax, and the current value of the rewards are 0.5€ (unlikely ofc), would it still be 0.98$ per ADA that would have to be paid taxes of? Or would it be possible to deduct a realized loss on the total price?

Hi Daniel,

Tax laws vary, but being a US-based operation I record my rewards as income immediately upon being paid by the protocol. As long as that Ada remains in any of my wallets for at least one year, any revenue from appreciation would be taxed as capital gains upon the Ada being sold for Fiat.

If I were in your situation, I would record Ada rewards as income earned using the corresponding Ada price at the time the rewards were paid. From there I would need to sell some Ada into some other currency - each transaction there would be a separate taxable event, but only on any gains made between the time the Ada was earned and when the Ada was sold. Since the Ada was not held for at least one year, any earnings made on that Ada in the brief time between being paid and selling would be taxed at income tax rates as well.

With that being said, there is hope the IRS will treat rewards as property so we only need to pay taxes on gains upon selling - which would be fantastic.

Your Friend, FROG