Newly minted crypto tokens created through staking should only be taxed when sold—not received—because they’re like crops or livestock, blockchain industry members told a federal court.

Three cryptocurrency nonprofits filed an amicus brief May 1 in a lawsuit against the IRS over the process of “staking,” when someone contributes computing power to run a blockchain network and is rewarded with new crypto tokens. The suit centers on when those tokens should be taxed: when they’re created or when they’re first sold.

The Blockchain Association, Crypto Council for Innovation, and Solana Policy Institute said it should be the latter. “A …