U.S. Tax Rules for Indian Crypto Staking and NFTs (2025 Update)

(MUMBAI, INDIA) A new explainer published on November 1, 2025, has sharpened the focus on how the Internal Revenue Service will treat digital asset activity by Indian-origin investors who are U.S. citizens, Green Card holders, or U.S. tax residents. The guidance, highlighted by VisaVerge.com, stresses that U.S. taxes apply to worldwide income, including crypto staking rewards and earnings from NFTs, even when trades and holdings sit on Indian exchanges or wallets.

The practical effect is clear: those living in or connected to India who file in the United States 🇺🇸 need to track digital asset income and gains in U.S. dollars and report them on the same forms used for stocks and other property.

How staking rewards are taxed

The explainer lays out a two-step tax model for staking rewards:

• Staking rewards are taxed as ordinary income when received, based on fair market value at that time.
• If those rewards are later sold, any increase over the value at receipt is taxed again as a capital gain.

That two-step model mirrors the IRS treatment of interest and subsequent sales of assets bought with that interest. VisaVerge.com emphasizes that “staking pools, DeFi platforms, and exchange staking all count as taxable crypto income,” addressing assumptions that non-custodial or decentralized platforms might escape U.S. reporting rules.

NFT taxation: minting, sales, and royalties

NFT activity is treated similarly with layered tax consequences:

• Minting or buying an NFT establishes your cost basis.
• Selling the NFT can trigger a capital gain (or loss) based on sale proceeds minus cost basis.
• Royalties paid to creators are ordinary income when paid, separate from any later capital gains on the original token.

Artists and developers who receive payments over time must account for the timing of each payment. According to VisaVerge.com, gas fees and marketplace fees tied to NFT activity can be deductible expenses, which may reduce taxable income for creators operating as a business.

Case studies (practical examples)

1. Staker in Mumbai
   • Receives 0.50 ETH in staking rewards in 2025 valued at around $1,200 → $1,200 ordinary income at receipt.
   • Later sells the same 0.50 ETH for $1,800 → $600 capital gain on sale.
   • Key point: volatile prices make precise records at receipt and sale essential.
2. Green Card holder in Bengaluru (NFT artist)
   • Mints and sells artwork for $2,500 → ordinary income at sale.
   • Any future royalties on the same work are ordinary income when paid.
   • Gas and marketplace fees tied to those sales may reduce taxable income if properly recorded.

Reporting and forms

The explainer maps crypto reporting to standard IRS forms:

• Base return: Form 1040
  • Income from staking and NFT royalties reported on appropriate income schedules.
• Capital gains/losses: Schedule D and Form 8949
  • List each transaction with date, proceeds, cost basis, and gain/loss.
• Foreign accounts and assets:
  • FBAR: FinCEN Form 114 — required when combined foreign account balances exceed the threshold during the year.
  • FATCA: Form 8938 — may be required if foreign financial asset values cross set levels (thresholds vary by residence and filing status).

The explainer stresses recordkeeping in U.S. dollars at the time of each event and issues a clear warning:

“Crypto-to-crypto swap” is a taxable disposal — trading one coin or token for another is treated as selling property and immediately buying different property.

Foreign platform use and reporting obligations

• Using overseas platforms or wallets does not change U.S. tax obligations.
• Location of an app, platform, or wallet does not affect whether income is taxable. What matters is the taxpayer’s U.S. status and worldwide income.
• Thresholds for FBAR and FATCA differ for individuals living abroad and for joint filers; household and residence can change filing burdens.
• The guidance recommends a conservative posture to avoid penalties, particularly for regular activity on Indian exchanges.

Practical challenges and recordkeeping tips

Tax professionals note the main friction points:

• Staking rewards can pay out frequently (sometimes daily); small, repeated rewards are easy to forget.
• NFT creators may receive dozens of micro-royalty payments across marketplaces.
• Each payment is income when received, and each later sale triggers gains or losses — waiting until year-end risks missing crucial data.

Recommended recordkeeping measures:

• Keep a detailed ledger with U.S. dollar values for each reward received and each NFT or token sold.
• Use simple tools: a spreadsheet, date stamps, and screenshots to confirm fair market value at receipt and sale.
• Record gas fees and marketplace fees to support potential deductions.

Filing mechanics and penalties

• The digital asset question on Form 1040 appears near the top to draw attention.
• Answering “no” while having crypto activity risks misstating the return.
• Transaction-level details go on Form 8949 and Schedule D.
• FBARs are filed through FinCEN (not the IRS) via FinCEN Form 114; FATCA’s Form 8938 attaches to the tax return.

Common gray areas clarified

• Token-to-token trades are taxable even if no fiat is exchanged — treated as selling one asset and buying another.
• You cannot defer reporting staking income until you sell the reward coin — value is taxed when the reward hits the wallet and again upon sale.
• As the explainer states: “rewards are ordinary income when received (fair market value at receipt).”

Final takeaway and recommendation

The November update’s core message: the rules themselves are not new, but their application to everyday digital-asset use cases is now clearer. Digital assets—from small staking rewards to ongoing NFT royalties—are expected to be reported similarly to stock trades and conventional royalties.

For Indian-origin U.S. taxpayers, this typically means managing double compliance: two tax systems, two record sets, and two calendars. The guidance closes with practical advice:

• Keep every transaction’s fair market value in U.S. dollars at the time it occurs.
• Consult a tax professional with cross-border crypto experience if your activity spans exchanges, wallets, and income types.

For direct reference to IRS materials, see the agency pages on Form 8949, Schedule D, Form 1040, FinCEN Form 114, and Form 8938.