US Allows Crypto ETFs and Trusts to Receive Staking Rewards
The IRS has clarified regulations for cryptocurrency exchange-traded products, enabling trusts to stake digital assets and distribute rewards.
The U.S. Internal Revenue Service (IRS), overseeing the country’s tax collection under the Department of the Treasury, has revised its guidelines for cryptocurrency Exchange-Traded Products (ETPs), allowing trusts to earn rewards from staking digital assets.
On Monday, Secretary Scott Bessent announced via a post on X that the guidance provides crypto ETPs with “a definitive route to stake digital assets and distribute rewards to retail investors.”
The updated guidance on the IRS website permits crypto trusts to engage in staking, provided they are traded on a national securities exchange, possess only cash and a single type of digital asset, held by a custodian, and manage specific investor risks.
Source: Scott Bessent
“The ramifications on staking adoption will be substantial,” said Bill Hughes, senior counsel at Consensys, in a post on X.
“This safe harbor provides crucial regulatory and tax clarity for institutional vehicles such as crypto ETFs and trusts, enabling compliance while participating in staking. It effectively reduces a significant legal hurdle that has dissuaded fund sponsors, custodians, and asset managers from incorporating staking yields into regulated investment products.”
This guidance follows the U.S. Securities and Exchange Commission (SEC) approving generic listing standards in September, a change expected to facilitate the approval of cryptocurrency exchange-traded funds. The IRS and Treasury have made note of the SEC’s alterations in their updated guidelines.
Related: U.S. lawmakers face challenges with crypto tax policies amidst the government shutdown
Guidance Released with Government Shutdown Approaching?
Reports indicate that several Democratic lawmakers are prepared to support Republicans in passing a resolution through January to end the government shutdown, which has persisted for over 40 days.
At the time of this update, the Senate has not voted on this matter, and numerous departments, including the SEC and IRS, have seen staff furloughed since the shutdown began.
