IRS Safe Harbor Opens Door for Crypto ETFs to Share Staking Rewards

The U.S. Internal Revenue Service (IRS) has introduced a new safe harbor policy that could revolutionize the crypto exchange-traded product (ETP) market by allowing funds to share staking rewards with investors. Announced on Monday, the guidance enables trusts to stake their digital assets without losing their tax classification as investment or grantor trusts under federal tax law.

This move is a major milestone for the crypto industry, especially for proof-of-stake (PoS) networks like Ethereum (ETH). Under PoS, participants lock or “stake” crypto assets to secure blockchain networks and earn staking rewards. The new IRS framework now allows regulated ETPs to participate in staking while maintaining compliance with tax rules.

Treasury Secretary Scott Bessent praised the decision, calling it a clear path for crypto ETPs to stake digital assets and share rewards with retail investors. He added that the policy enhances investor benefits, fosters innovation, and strengthens America’s position as a global leader in blockchain and digital assets.

Industry leaders also view the development as transformative. Bill Hughes, senior counsel at Consensys, described it as removing a “major legal barrier” that previously discouraged fund managers and custodians from integrating staking yields into investment products. According to Hughes, this change will likely boost staking participation, liquidity, and overall network decentralization.

The clarification from the IRS follows recent statements from the Securities and Exchange Commission (SEC) affirming that staking activities do not violate securities laws. With this new tax guidance, institutional players now have the confidence to integrate staking into their regulated offerings, potentially increasing mainstream adoption.

Despite leadership turnover within the IRS’s crypto division, this safe harbor policy signals long-awaited regulatory and tax clarity—marking a pivotal moment for digital asset investment in the U.S.