A new safe harbor announced Monday by the U.S. Internal Revenue Service is 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 into play without jeopardizing their tax status as investment trusts and grantor trusts for federal income tax purposes,” according to the IRS document, which took effect immediately. Under proof-of-stake consensus mechanisms, network participants stake or “stake” some of their cryptos – Ethereum or another crypto – to secure the network, and they receive a return for that.
Treasury Secretary Scott Bessent posted on social media site
He said this “increases benefits for investors, drives innovation, and keeps America a global leader in digital assets and blockchain technology,” echoing President Donald Trump’s usual sentiments and his wishes that the United States will become the world leader in crypto.
“This effectively removes a major legal barrier that discouraged fund sponsors, custodians and asset managers from integrating staking returns into regulated investment products,” said Bill Hughes, Consensys senior counsel and director of global regulatory matters, in his own article on X. “More regulated entities can now invest on behalf of investors, likely increasing staking participation, liquidity and decentralization of the network.”
Staking had been an unresolved issue since the arrival of crypto exchange-traded products (ETFs), which brought a new wave of investment in digital assets. The practice has emerged in conversations amid debates over U.S. crypto policing, and the Securities and Exchange Commission clarified earlier this year that staking does not violate securities law.
Read more: Crypto Coalition Says SEC Staking Is an “Essential Good” Not Security
The IRS guidance is aimed at unauthorized proof-of-stake networks.
“The impact on staking adoption is expected to be significant,” Hughes said, saying the guidance “provides long-awaited regulatory and tax clarity.”
The IRS crypto office has recently undergone a significant leadership change, losing a series of managers this year as the Trump administration reduced the tax agency’s staff and resources. The IRS did not respond to media questions asking whether the office was still operating as before.
Read more: Head of IRS crypto work leaves as US tax changes loom for digital assets
