New IRS Guidelines: Crypto ETF Investors Can Now Benefit From Staking Rewards
New guidelines about crypto exchange-traded products have been announced by the Internal Revenue Service and the U.S. Treasury Department. They can engage in staking while keeping their tax status thanks to this guidance. Revenue Procedure 2025-31, which was released on November 10, eliminates a significant obstacle for regulated investment products. Previously, proof-of-stake networks like Ethereum and Solana were unable to generate on-chain yield for these products. The guidelines clarify how staking rewards should be managed for tax purposes by offering a safe harbor approach. It also describes how issuers might give investors certain rewards without creating tax issues at the entity level.
Crypto Investors Gain Direct Access to Staking Through ETFs
Spot exchange-traded funds and similar trusts listed on national exchanges may use qualified custodians to stake their holdings in accordance with the new regulations. Additionally, they can give stockholders direct access to staking benefits. To be eligible, products must continue to hold only cash and one digital asset, and investors must be informed of the staking action.
When investors take ownership of staking rewards, they will be taxed as ordinary income. They won’t be subject to trust-level taxes. This framework avoids turning commodity-style cryptocurrency ETFs into mutual fund-like structures while maintaining their current tax model. Additionally, the guidelines mandate that issuers report staking income distribution in a transparent manner. They also have to reveal operational risks like slashing or validator performance fines.
New Rules Bring Staking Access to Conventional ETF Accounts
Retail investors may soon be able to use conventional ETF trading accounts to earn staking yield due to the change. They no longer have to establish a validator, manage self-custody, or communicate directly with on-chain protocols. Structured cryptocurrency products in Europe and Asia, which already permit staking features, currently outperform U.S.-listed cryptocurrency products. They may become more competitive for institutional investors as a result of this modification.
For more up-to-date crypto news, you can follow Crypto Data Space.
