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Treasury and IRS Create Safe Harbor Allowing Crypto ETFs to Stake and Share Rewards

A new IRS policy sets strict conditions that let regulated crypto funds pass staking yields to investors without jeopardizing their trust tax treatment.

Overview

  • Revenue Procedure 2025-31 takes effect immediately and gives existing ETFs nine months to amend trust documents to add staking features.
  • The safe harbor applies to permissionless proof-of-stake assets such as Ethereum and Solana and requires single-asset holdings alongside cash.
  • Funds must use qualified custodians and independent staking providers and maintain liquidity protocols so redemptions can be met even while assets are staked.
  • Reported implementations cite Coinbase Custody, BitGo, and Gemini as examples, and rewards are to be distributed to investors, reportedly at least quarterly.
  • Industry experts, including ConsenSys’s Bill Hughes, say the clarity removes a major legal barrier and is likely to boost staking participation, liquidity, and institutional adoption.