The Internal Revenue Service (IRS) has introduced a new safe harbor framework for exchange-traded products (ETPs) that engage in staking digital assets.
The guidance, released under Revenue Procedure 2025-31, outlines how such activities will be treated for federal tax purposes. Moreover, it aims to clarify and remove longstanding uncertainty surrounding staking by institutional investors.
Treasury Secretary Scott Bessent announced the decision on X, describing the guidance as a milestone for the crypto industry. He said the update gives ETPs a “clear path to stake digital assets and share staking rewards with retail investors.”
Bessent added that the measure strengthens investor benefits, encourages innovation, and reinforces America’s global leadership in digital asset and blockchain technology.
The IRS announcement follows a related statement issued earlier this year by the Securities and Exchange Commission (SEC). In that statement, the SEC affirmed that activities related to proof-of-stake are not considered securities transactions.
Together, these developments create a more consistent regulatory environment for institutional participants in digital assets.
Safe Harbor Conditions for ETPs
The IRS guidance outlines several requirements for trusts or funds seeking to qualify under the new safe harbor:
- They may stake tokens only on permissionless proof-of-stake networks.
- Assets must be limited to a single digital currency type and cash.
- A qualified custodian must hold the assets.
- The trust must maintain an SEC-approved liquidity plan.
- Independent staking providers must operate under arm’s-length agreements.
- Activities must remain confined to holding, staking, and redemption.
These conditions, therefore, aim to ensure both regulatory compliance and investor protection while allowing participation in staking rewards.
Legal Experts See Regulatory Clarity
In a post on X, Bill Hughes, Senior Counsel at Consensys, stated that the guidance delivers much-needed tax and regulatory clarity for institutional investors.
Hughes explains that the safe harbor elevates staking from a compliance issue to an acknowledged activity. Consequently, this development makes it feasible for regulated investment vehicles, including crypto ETFs and trusts, to engage in staking.
Furthermore, Hughes noted that this framework could accelerate mainstream participation across proof-of-stake blockchains.
By lowering compliance barriers and standardizing tax treatment, the policy expands institutional engagement in crypto staking and strengthens confidence in U.S. digital asset regulation.