U.S. tax authorities have issued new guidelines that formally establish a regulatory “safe harbor” for institutional investors to participate in cryptocurrency staking, removing a significant barrier to mainstream adoption.
The Internal Revenue Service (IRS) guidance allows Exchange Traded Products (ETPs) and Exchange Traded Funds (ETFs) to stake digital assets, providing crucial fiscal and regulatory certainty for financial institutions.
Treasury Secretary Scott Bessent announced the decision on a social media platform, stating the new directives offer ETPs and ETFs “a clear path to participate in staking digital assets and share the rewards with retail investors.”
He added that this move “increases investor benefits, drives innovation, and keeps the United States as a global leader in Blockchain technology and digital assets.”
Earlier this year, the Securities and Exchange Commission (SEC) clarified that operations on proof-of-stake networks do not constitute securities transactions. This prior ruling opened the door for greater institutional involvement in blockchains like Ethereum, Solana, and Cardano.
The IRS had received numerous inquiries regarding whether staking activities might disqualify certain trusts or funds for federal income tax purposes. The new 18-page guide, Revenue Procedure 2025-31, introduces specific requirements to address these concerns.
🚨 U.S. paves the way for institutional staking 🚀
The IRS establishes new rules for ETP/ETF wishing to stake cryptocurrencies.
This provides tax and regulatory certainty to institutions.
An increase in financial products linked to networks is expected… pic.twitter.com/fLVV1sdHvH— Diario฿itcoin (@DiarioBitcoin) June 18, 2024
Under the safe harbor conditions, trusts or funds seeking to participate in staking must maintain a single type of digital asset and cash. They must also operate through a qualified custodian.
Bill Hughes, a senior advisor at Consensys, commented on a social media platform that these rules allow ETPs to stake cryptocurrencies on permissionless networks in a regulated manner.
Hughes noted that the impact on staking adoption “should be significant.” He emphasized that the safe harbor provides the regulatory and tax clarity institutional vehicles like ETFs and crypto trusts have awaited for years.
Many fund managers had previously avoided incorporating staking mechanisms due to fears of conflicts with tax or securities regulations.
The new IRS guide provides a solid framework for institutions to actively participate in the crypto ecosystem without compromising compliance. This is expected to lead to an increase in financial products tied to proof-of-stake networks.
Analysts anticipate that the decision will stimulate innovation within the U.S. financial system and foster international competition for attracting institutional capital to the crypto sector.