Industry insiders say this could remove a significant legal barrier for fund sponsors.
A new safe harbor announced by the U.S. Internal Revenue Service on Monday is being seen as a major step toward allowing crypto exchange traded products (ETPs) to share staking rewards with their investors.
Under certain conditions, the new guidance allows trusts to “stake their digital assets without jeopardizing their tax status as investment trusts and grantor trusts for Federal income tax purposes,” according to the IRS document, which went into effect immediately. Under proof-of-stake consensus mechanisms, network participants put up or “stake” some of their cryptos — Ethereum ETH$3,614.58 or another crypto — to secure the network, and they receive a return for that.
Treasury Secretary Scott Bessent posted on social media site X that the policy is “giving crypto exchange-traded products (ETPs) a clear path to stake digital assets and share staking rewards with their retail investors.”
He said it “increases investor benefits, boosts innovation, and keeps America the global leader in digital asset and blockchain technology,” echoing the routine sentiments of President Donald Trump and his vows that the U.S. will become the world leader in crypto.
“It effectively removes a major legal barrier that had discouraged fund sponsors, custodians, and asset managers from integrating staking yield into regulated investment products,” said Bill Hughes, Consensys senior counsel and director of global regulatory matters, in his own post on X. “More regulated entities can now stake on behalf of investors, likely increasing staking participation, liquidity, and network decentralization.”
Staking had been a hanging question since the arrival of crypto exchange traded products (ETFs), which brought a new wave of digital assets investment. The practice has arisen in conversations across the range of U.S. crypto police debates, and the Securities and Exchange Commission clarified earlier this year that staking doesn’t run afoul of securities law.
Read More: Crypto Coalition Tells SEC Staking Is ‘Essential Good,’ Not a Security
The IRS guidance is targeted to permissionless proof-of-stake networks.
“The impact on staking adoption should be significant,” Hughes said, saying the guidance “provides long-awaited regulatory and tax clarity.”
The IRS’s crypto office had been through significant recent leadership turnover, losing a series of managers this year as the Trump administration slashed staff and resources at the tax agency. The IRS didn’t respond to media questions inquiring whether the office is still operating as before.
