The US Internal Revenue Service (IRS), the country’s tax-collection bureau under the Department of the Treasury, has updated its guidance for cryptocurrency exchange-traded products (ETPs) to include a safe harbor for trusts to stake digital assets. Treasury Secretary Scott Bessent announced the release of this guidance in a Monday X post, stating that the agencies have provided crypto ETPs "a clear path to stake digital assets and share staking rewards with their retail investors.”
According to the guidance available on the IRS website, government agencies will permit crypto trusts to participate in staking under specific conditions. These conditions include being traded on a national securities exchange, holding only cash and units of a single type of digital asset, being held by a custodian, and implementing measures to mitigate specific risks to investors.
Bill Hughes, senior counsel at Consensys, commented on the development in a Monday X post, stating, "The impact on staking adoption should be significant." He further elaborated that this safe harbor offers "long-awaited regulatory and tax clarity for institutional vehicles such as crypto ETFs and trusts, enabling them to participate in staking while remaining compliant." Hughes noted that it "effectively removes a major legal barrier that had discouraged fund sponsors, custodians, and asset managers from integrating staking yield into regulated investment products."
This updated guidance follows the US Securities and Exchange Commission (SEC) approval in September of generic listing standards, which was expected to pave the way for the greenlighting of crypto exchange-traded funds. The IRS and Treasury explicitly referenced this SEC rule change as a contributing factor to the updated guidance.
Context: Government Shutdown and Regulatory Developments
The release of this guidance occurs shortly after reports indicated a potential end to a prolonged government shutdown. On Sunday, it was reported that several Democratic lawmakers in the US Senate were prepared to join Republicans in a vote to end the shutdown by passing a continuing resolution through January.
As of the time of publication, the Senate had not yet voted on the measure. The government shutdown, which began on October 1, resulted in the furloughing of staff at numerous departments and agencies, including the SEC and IRS.