IRS Opens Door to Staking in Crypto ETFs With New Guidance

[Ben Graham]

The Internal Revenue Service has published new guidance that clears the way for crypto exchange-traded products to participate in staking without risking their tax classification. This update, labeled Revenue Procedure 2025-31, gives certain trusts the green light to engage in staking while maintaining their federal income tax status. It is a step that could change how retail investors interact with staking rewards, especially through regulated products.

How the New Framework Actually Works

According to the IRS, a trust can stake digital assets as long as it only holds one type of asset alongside cash and relies on a qualified custodian. The rules are specific to permissionless proof-of-stake networks, meaning projects like Ethereum and Solana are within their scope.

Source: IRS.gov

Treasury Secretary Scott Bessent said this setup offers a direct way for ETPs to stake digital assets and pass those rewards to retail holders. The guidance also outlines how funds can navigate common staking concerns such as slashing, liquidity, and related-party risks.

What This Means for Funds and Investors

Until now, the idea of staking inside a U.S.-regulated fund was murky at best. Legal and tax concerns made it difficult to build staking into crypto ETPs. This guidance changes that, making it easier for asset managers to offer products that capture staking rewards in a structured, compliant way.

Legal experts say this move clears a major hurdle that kept staking out of mainstream investment vehicles. Now, crypto ETFs could begin to reflect the same kind of yield that everyday token holders get from staking on-chain.

DISCOVER: Best New Cryptocurrencies to Invest in 2025

What Funds Need to Be Put in Place

To take advantage of the update, ETPs must check several boxes. The trust documents must allow for staking, the custodian needs to meet qualification standards, and the product must maintain enough liquidity to honor redemptions.

Market Cap

24h 7d 30d 1y All Time

Some legal analysts expect funds already tracking Ethereum and Bitcoin may begin amending their trust structures soon. A nine-month window gives them time to make the necessary updates, so staking could enter the picture by mid-2026 for some existing ETFs.

Not Without Risks

Staking may sound like passive income, but it comes with its own set of hazards. Validators can be penalized or slashed if they act against the network. There are also periods where assets are locked up, making them less liquid during certain times. For ETPs, those variables must be managed carefully. Fund managers will need to be transparent about how rewards are calculated, who handles the validation, and what fees are taken along the way.

DISCOVER: 20+ Next Crypto to Explode in 2025

What This Could Kickstart

Now that the regulatory path is clearer, the door is open for a new wave of staking-enabled investment products. Fund managers might begin competing not just on exposure to crypto prices, but on how effectively they can deliver staking rewards.

BREAKING: U.S. Treasury Secretary @SecScottBessent today announced that the Treasury Department, together with the IRS, has approved the inclusion of staking for digital assets in crypto ETP products.

This development directly benefits multiple $INJ ETP and ETF products that… pic.twitter.com/WXXeNcYWzD

— Injective (@injective) November 10, 2025

For retail investors, this is a chance to earn staking yields without setting up wallets or running validators themselves.

A Sign That Crypto Is Maturing

This IRS guidance might end up being a quiet milestone in how crypto fits into the broader financial system. Rather than leaving staking rewards to individuals, it brings network participation into the hands of institutional-grade investment tools. With this step, regulators are signaling that staking can live inside traditional finance, as long as the rules are followed. Now, all eyes are on how quickly asset managers adapt and whether these staking ETPs can deliver both yield and trust.

DISCOVER: 20+ Next Crypto to Explode in 2025 

Join The 99Bitcoins News Discord Here For The Latest Market Updates

Key Takeaways

• The IRS has approved staking for certain crypto ETPs through Revenue Procedure 2025-31, allowing trusts to earn rewards without losing tax status.
• To qualify, ETPs must hold only one crypto asset plus cash, use a qualified custodian, and operate on permissionless proof-of-stake networks like Ethereum or Solana.
• This move clears legal uncertainty and could lead to staking rewards becoming part of mainstream crypto ETFs available to retail investors.
• ETPs have a nine-month window to update trust structures and custody arrangements, which means staking could roll out in existing funds by mid-2026.
• Investors must still manage risks like slashing and liquidity, but the update takes a major step toward bringing staking into traditional investment products.

The post IRS Opens Door to Staking in Crypto ETFs With New Guidance appeared first on 99Bitcoins.