On Dec. 18 Rep. Byron Donalds formally asked the Internal Revenue Service to remove a rule that treats cryptocurrency staking rewards as taxable income at the moment they are received. That same day, Donalds’ wife bought between $50,001 and $100,000 worth of Bitcoin — a purchase Donalds says he will report as his own. His office has confirmed the acquisition was made by his wife, but the overlap in timing has raised questions about potential conflicts of interest. Source reporting is available here: https://www.notus.org/congress/byron-donalds-crypto-rules-bitcoin

The policy change Donalds requested would shift how staking economics interact with tax policy. Under taxation-at-receipt, validators and stakers record ordinary income immediately when rewards are minted or credited, which can create an immediate tax liability even if the holder has not sold assets to generate cash to pay that tax. Removing or delaying that tax trigger effectively reduces short-term sell pressure created by tax obligations and changes the liquidity timing that validators, exchanges, and retail stakers must manage.

Donalds is active in crypto policy-making beyond this letter; he’s participated in legislative discussions about Bitcoin and has proposed measures related to establishing Bitcoin reserves. That involvement is what makes the timing sensitive: when a policymaker advocating for rules that can affect market flows has near-term personal exposure to crypto markets, it creates an appearance — if not an implication — of private benefit from public action.

Ethics and market observers note the distinction between lawful conduct and the appearance of impropriety. Even if the purchase was made by a spouse and will be disclosed, the simultaneity of advocacy and acquisition is the core concern: regulatory changes to staking taxation alter incentives and liquidity behavior across proof-of-stake networks, and any perception that a lawmaker stood to gain personally from those changes can erode public confidence in the impartiality of rulemaking.

Critics argue the timing looks suspicious and may undermine public trust.