IRS and Treasury Clear Crypto ETPs for Staking and Yield
The U.S. Internal Revenue Service and Treasury Department released groundbreaking guidance on November 10, 2025, establishing a safe harbor for crypto exchange-traded products to stake digital assets. Treasury Secretary Scott Bessent announced the policy provides crypto ETPs with a clear pathway to stake digital assets and share staking rewards with retail investors. This regulatory clarity removes longstanding barriers that prevented institutional fund sponsors from offering staking-enabled investment products.
The guidance sets out specific conditions under which investment trusts can stake digital assets without jeopardizing their tax status as investment trusts or grantor trusts. Industry experts believe this development eliminates a major legal barrier that discouraged fund sponsors, custodians, and asset managers from integrating staking yield into regulated products. The move signals a significant shift in how traditional finance can interact with proof-of-stake blockchain networks.
Safe Harbor Requirements for Crypto ETPs Staking Programs
According to the new Revenue Procedure 2025-31, trusts must meet several criteria to qualify for the safe harbor. Eligible trusts must trade on a national securities exchange and hold only cash and units of a single type of digital asset. Qualified custodians must manage key storage and staking activities to ensure compliance.
Trusts must maintain SEC-approved liquidity policies that ensure redemptions can occur with staked assets. Independent, arm’s-length agreements with staking providers are required under the framework. The guidance specifically targets permissionless proof-of-stake networks where participants stake cryptocurrencies like Ethereum to secure networks and earn returns. Activities must remain restricted to holding, staking, and redeeming assets without discretionary trading.
Institutional Staking Adoption Expected to Surge
Bill Hughes, senior counsel at Consensys, stated that more regulated entities can now stake a claim on behalf of investors. This capability will likely increase staking participation, liquidity, and network decentralization across major blockchain platforms. Proof-of-stake networks like Ethereum and Solana depend on users depositing native tokens to function securely. Staking rewards typically range from 1.8% to 7% in annual percentage yield, depending on the network.
The legal status of staking yield created uncertainty during the Biden administration when the SEC suggested staking rewards might constitute unregistered securities. When spot Ethereum ETFs received approval last year, those products notably excluded staking capabilities. Grayscale became the first U.S. ETF issuer to offer ETH staking rewards to holders last month. The new policy positions such offerings to become standard practice across the industry.
Crypto ETPs Yield Generation Transforms Investment Landscape
The announcement arrives at a crucial moment following progress toward ending the U.S. government shutdown. Bitcoin has stabilized above six figures while altcoins like Ethereum, Solana, and Avalanche recover from earlier declines. Until now, U.S. rules have limited how ETPs could generate on-chain yield, restricting them primarily to holding spot assets.
The new Treasury and IRS rules apply to crypto ETPs holding or tracking major digital assets, including Ethereum, Cardano, and Solana. Any token that can be staked and meets regulatory standards qualifies under the framework. The decision places the United States ahead of other major financial jurisdictions in formalizing staking within its regulatory perimeter. This positions American markets as attractive destinations for crypto innovation and capital deployment.
Regulatory Clarity Drives Crypto Market Confidence Forward
Products like REXShares’ Ethereum Staking ETF, launched in September 2025, demonstrated strong investor appetite before this guidance. The framework transforms staking from a niche activity into a compliant, yield-generating financial strategy accessible to mainstream investors. Bessent emphasized that the policy increases investor benefits, boosts innovation, and maintains America’s global leadership in digital asset and blockchain technology.
Patrick Witt, executive director of President Donald Trump’s Council of Advisors for Digital Assets, celebrated the announcement. He noted the guidance stemmed from recommendations made in a White House report on crypto released during the summer. The alignment between regulatory agencies and executive priorities demonstrates coordinated support for digital asset integration into traditional financial markets.
The crypto ETPs staking guidance represents a watershed moment for institutional adoption of blockchain technology. Investors gain access to yield-generating opportunities while maintaining regulatory compliance and tax transparency. Fund sponsors can develop innovative products without fear of inadvertently violating complex tax regulations. This clarity empowers the digital asset ecosystem to mature and scale sustainably.
Conclusion
The IRS and Treasury guidance removes critical uncertainty that hampered institutional staking participation. Crypto ETPs can now offer competitive yield products that rival traditional investment vehicles. This development strengthens network security while expanding retail access to staking rewards. American markets gain a competitive advantage in attracting crypto-native capital and talent.
