DAC8 for Staking and Lending Platforms

Staking and lending platforms allow users to earn returns on their crypto-assets by participating in proof-of-stake networks or by lending their assets to borrowers. These activities create specific DAC8 reporting considerations.

Staking Under DAC8

Staking itself — the act of locking crypto-assets to participate in network validation — is not a reportable transaction under DAC8. However, several aspects of staking services may trigger reporting obligations.

Staking reward distributions credited to a user's account may need to be tracked for subsequent reporting when the user exchanges, transfers, or withdraws the rewards. If the staking platform exchanges staking rewards into a different crypto-asset or fiat currency on the user's behalf, this exchange is reportable. And transfers of crypto-assets into and out of staking positions through the platform may constitute reportable transfers.

Lending Under DAC8

Crypto lending involves a user depositing crypto-assets with the platform, which then lends them to borrowers. The lending platform's DAC8 obligations depend on how the lending is structured.

If the platform takes custody of the user's assets and returns them with interest, the initial deposit and return of assets may constitute reportable transfers. Interest paid in crypto-assets may need to be tracked for subsequent reporting. And if the platform converts interest from one crypto-asset to another on the user's behalf, this conversion is a reportable exchange.

Practical Approach

Staking and lending platforms should map their specific product structures to DAC8's transaction categories, identify which user actions trigger reportable events, build tracking systems that follow the lifecycle of staked and lent assets, and collect full due diligence data from all users, regardless of whether their current activity generates reportable transactions.

Conclusion

Staking and lending platforms operate in a nuanced area of DAC8 compliance. While the core activities of staking and lending may not be directly reportable, the associated transactions — distributions, conversions, and transfers — often are. Careful product-level analysis is essential.