The Internal Revenue Service (IRS) has argued in a lawsuit that staking cryptocurrencies should create a tax liability immediately upon completion. The IRS has dismissed a lawsuit filed by cryptocurrency investor Joshua Jarrett in the U.S. District Court for the Middle District of Tennessee. The lawsuit concerns the tax treatment of staking, a process by which new tokens are generated by verifying monetary transactions using existing tokens and computing power. In its response dated Dec. 20, the IRS denied that staking creates new property and argued that taxpayers (Jarrett) should pay taxes on the value of tokens that are pledged as rewards when they are received.