U.S. Treasury Clears Path for Crypto ETF Staking in Landmark Guidance
The U.S. Treasury Department and the Internal Revenue Service (IRS) have issued new guidance that could transform how crypto-based exchange-traded funds (ETFs) operate, officially allowing regulated investment products to earn staking rewards without jeopardizing their tax status.
The update, Revenue Procedure 2025-31, published on November 10, establishes a long-awaited framework enabling spot crypto ETFs, such as those holding Ethereum (ETH) or Solana (SOL), to participate in staking through qualified custodians. The move marks a major policy shift bridging traditional finance with decentralized blockchain networks.
Breaking Down the New Rules
Under the new guidance, spot ETFs and similar trusts listed on national exchanges can stake their crypto holdings while remaining compliant with existing tax structures. Crucially, staking rewards will now flow directly to investors and be taxed as ordinary income upon receipt, rather than being taxed at the trust level.
This “safe harbor” approach preserves the commodity-style tax treatment used by existing crypto ETFs, avoiding reclassification as mutual funds, an outcome that had long deterred issuers from exploring staking mechanisms.
Funds participating in staking must disclose the activity to investors, maintain a portfolio composed only of cash and a single digital asset, and report staking income transparently, including operational risks like validator downtime or penalties known as “slashing.”
Analysts project that Ethereum-based ETFs could offer annual yields between 3% and 5%, while Solana-linked funds may deliver 5% to 7%, depending on network conditions and staking participation rates.
A Boost for Market Accessibility
For everyday investors, the change means potential access to on-chain staking rewards through traditional brokerage accounts, without the need for direct blockchain interaction, self-custody, or validator setup.
The U.S. market has so far lagged behind Europe and Asia, where staking-enabled ETFs have already emerged. This guidance could narrow that gap and make American crypto products more competitive, particularly for institutional investors seeking yield-bearing exposure.
Industry Reaction and Next Steps
The announcement is expected to trigger a wave of filings from major ETF issuers. Market leaders such as BlackRock and Fidelity are reportedly preparing to update their Ethereum ETF prospectuses to include staking components, while firms focused on Solana and other proof-of-stake networks are exploring similar moves.
Regulatory experts say the guidance also sets the stage for international harmonization, with potential alignment under Europe’s Markets in Crypto-Assets (MiCA) framework.
In what could be a defining moment for crypto integration into mainstream finance, the Treasury’s decision signals growing recognition of staking as a legitimate, income-generating function, one that could soon reshape how digital asset funds deliver value to investors.
