DAC8 Reporting for Staking and Lending Platforms

Staking and lending platforms — services that allow users to earn rewards by locking up or lending their crypto-assets — present nuanced questions under DAC8. Whether these platforms fall within the directive's reporting scope, and how staking or lending rewards should be reported, depends on several factors that operators should carefully evaluate.

Are Staking and Lending Platforms in Scope?

The answer largely depends on whether the platform acts as an intermediary in a way that meets DAC8's definition of a Reporting Crypto-Asset Service Provider (RCASP). Key considerations include:

Staking-as-a-Service Providers

Platforms that offer staking services — accepting users' crypto-assets, delegating them to validators, and distributing rewards — are typically providing a service on behalf of users. Where the platform takes custody of the assets or acts as an intermediary in the staking process, it may qualify as an RCASP.

However, if a user stakes directly through their own validator node without an intermediary, there may be no RCASP involved in the transaction. The distinction between intermediated and non-intermediated staking is likely to be significant.

Crypto Lending Platforms

Lending platforms that accept crypto-asset deposits from users and lend them to borrowers are generally acting as intermediaries. If the platform facilitates the transfer of crypto-assets between lenders and borrowers, it may fall within DAC8's scope. Centralized lending platforms that pool user assets and manage the lending process should expect to be classified as RCASPs.

Decentralized Staking and Lending

For decentralized staking and lending protocols that operate without a central intermediary, the analysis is more complex and mirrors the broader questions around DeFi platforms under DAC8. Operators of interfaces or front-ends for such protocols should assess their potential obligations separately.

Reward Reporting Considerations

One of the most significant questions for staking and lending platforms is how rewards should be reported under DAC8.

Staking Rewards

Staking rewards — newly issued or distributed crypto-assets received in return for participating in network validation — may be reportable under DAC8 in several ways:

• As an acquisition: When a user receives staking rewards, this may represent an acquisition of crypto-assets that should be reflected in the user's reported data.
• Fair market value at receipt: The value of staking rewards should typically be determined at the time they are received or credited to the user's account.
• Aggregation: All staking rewards received by a user for a particular crypto-asset during the reporting period should generally be aggregated.

Platforms should determine whether staking rewards constitute a "Relevant Transaction" under DAC8 or whether they are captured through another reporting mechanism (such as being reported when eventually sold or transferred).

Lending Interest

Interest earned from lending crypto-assets raises similar questions:

• If interest is paid in crypto-assets, the receipt may be a reportable acquisition.
• If interest is paid in fiat currency, the reporting treatment may differ.
• The platform should track the fair market value of interest payments at the time of distribution.

Compounding and Auto-Restaking

Many staking and lending platforms offer automatic compounding, where earned rewards are immediately restaked or re-lent. Each compounding event may represent a separate reportable transaction, which could significantly increase the volume of data that needs to be tracked and reported.

Transfer and Exchange Elements

Beyond rewards, staking and lending platforms may also need to report on:

• Initial deposits: When a user transfers crypto-assets to the platform for staking or lending, this may be a reportable transfer.
• Withdrawals: When a user retrieves their crypto-assets (plus any accumulated rewards), this may also require reporting.
• Liquid staking tokens: Some platforms issue derivative tokens (such as stETH for staked ETH) when users stake their assets. The issuance and redemption of these tokens may constitute reportable exchange transactions.

Due Diligence for Staking and Lending Users

Staking and lending platforms that qualify as RCASPs must perform due diligence on their users. This includes collecting standard DAC8 identification data:

• Full name, date of birth, and address
• Tax Identification Number (TIN)
• Country of tax residence

Platforms should ensure their onboarding processes capture this information, even if their existing processes were designed primarily for AML compliance.

Interaction with Member State Tax Treatment

It is worth noting that the tax treatment of staking and lending rewards varies across EU Member States. Some jurisdictions may treat rewards as income at receipt, while others may tax only upon disposal. DAC8 reporting is designed to be neutral regarding tax treatment — the reporting obligations should apply regardless of how the user's jurisdiction taxes the activity. However, platforms may receive questions from users about the tax implications of reported data.

Practical Recommendations

1. Assess whether the platform's operational model qualifies it as an RCASP under DAC8.
2. Classify all reward types (staking rewards, lending interest, bonuses) and determine their reporting treatment.
3. Track compounding events individually if they represent separate reportable transactions.
4. Evaluate liquid staking token issuance as a potential reportable exchange.
5. Implement fair market value tracking at the time rewards are credited.
6. Review due diligence processes to ensure DAC8 compliance.
7. Consult with tax advisors on the classification of rewards under the directive.

Conclusion

Staking and lending platforms that act as intermediaries should generally expect to fall within DAC8's reporting scope. The reporting of rewards — including their timing, valuation, and aggregation — is likely to be a central compliance challenge. Platforms should begin analyzing their specific activities against DAC8's requirements and seek professional guidance where the classification is uncertain.

This article provides general information and should not be treated as legal or tax advice. Staking and lending platforms should consult qualified professionals for guidance tailored to their operations.