IRS and Treasury approves crypto staking for ETFs: Here’s what it means for investors
Scott Bessent, US Treasury Secretary. Image Credit: Stefani Reynolds/Bloomberg
The U.S. Treasury Department and the Internal Revenue Service (IRS) have issued new guidance that officially allows crypto exchange-traded products (ETPs) to stake digital assets and share staking rewards with investors. This historic move, described as a “game-changer” for Wall Street and the crypto industry, could open the floodgates for institutional adoption of proof-of-stake (PoS) blockchains like Ethereum (ETH), Solana (SOL), and Cardano (ADA).
A Landmark Decision for Crypto Integration on Wall Street
The new guidance provides a safe harbor framework for investment trusts and crypto ETPs to engage in staking without violating existing tax and regulatory guidelines. Under this policy, eligible funds can now legally stake digital assets on PoS networks and distribute earned rewards to investors in a regulated, transparent manner.
Treasury Secretary Scott Bessent praised the move, calling it “a bold step that boosts innovation and keeps America the global leader in blockchain technology.” The ruling not only expands investor access to crypto rewards but also reinforces the U.S. commitment to responsible digital asset regulation under the Trump administration.
Today @USTreasury and the @IRSnews issued new guidance giving crypto exchange-traded products (ETPs) a clear path to stake digital assets and share staking rewards with their retail investors.
This move increases investor benefits, boosts innovation, and keeps America the…
— Treasury Secretary Scott Bessent (@SecScottBessent) November 10, 2025
What Does the New IRS Guidance Mean?
In simple terms, the IRS guidance legitimizes staking as a mainstream financial activity. It means that ETFs or ETPs holding eligible digital assets can now participate in network validation and earn staking rewards without facing tax uncertainty or SEC enforcement risks.
To qualify, funds must:
- Hold only one type of digital asset from a permissionless PoS blockchain
- Operate solely for holding, staking, and redeeming tokens
- Rely on independent custodians and staking providers
- Maintain liquidity and compliance with U.S. tax law
This effectively provides the green light for large fund issuers like Grayscale, BlackRock, and Fidelity to expand staking-based crypto investment products.
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IRS and SEC Coordination: A Turning Point for Regulation
The decision builds upon Revenue Ruling 2023-14, which previously clarified how staking rewards should be taxed. It also follows the SEC’s August 2025 statement, which confirmed that protocol-level staking and “staking receipt tokens” are not securities, unless tied to an investment contract.
Together, these regulatory shifts mark the most significant policy alignment between the IRS, Treasury, and SEC in U.S. crypto history. Experts believe this harmony will reduce legal ambiguity and encourage mainstream financial institutions to enter the crypto staking market confidently.
Why This Matters for Ethereum, Solana, and Cardano
Proof-of-stake networks like Ethereum, Solana, and Cardano rely on users locking up tokens to validate transactions and secure the network. In return, they earn staking rewards, typically between 1.8% and 7% annually.
Previously, Wall Street funds were hesitant to offer staking due to unclear regulations. Now, with federal approval, crypto ETFs and ETPs can pass these yields directly to retail investors. Analysts predict a surge in demand for staking-enabled funds, potentially driving greater liquidity and price stability across major crypto assets.
Industry Reaction: “A Milestone Moment”
Crypto leaders welcomed the ruling as a milestone in the sector’s evolution. Bill Hughes, head of global regulation at Consensys, called it “a massive step toward making staking a mainstream financial activity.” Major firms like a16z and Paradigm also celebrated the announcement, highlighting its role in legitimizing regulated crypto income.
What’s Next for U.S. Crypto Policy?
The IRS guidance reflects a broader effort by the Trump administration to streamline crypto oversight. With both the Treasury and SEC aligned, analysts expect additional rules clarifying DeFi taxation and stablecoin regulation in 2026.
For now, the message from Washington is clear: crypto is moving from the margins to the mainstream, with staking leading the charge.
FAQ: IRS Crypto Staking Guidance
1. What did the IRS and U.S. Treasury announce about crypto staking?
The IRS and Treasury approved new guidance allowing crypto ETFs and ETPs to stake digital assets like Ethereum and Solana and share the rewards with investors under a regulated, tax-compliant framework.
2. What does “staking” mean in crypto?
Staking involves locking up crypto tokens on a proof-of-stake blockchain to help validate transactions. In return, stakers earn rewards, similar to earning interest on savings.
3. How does this IRS guidance affect Ethereum and Solana investors?
It makes staking more accessible through Wall Street funds, allowing regular investors to earn passive income from staking without directly managing crypto wallets or nodes.
4. Is staking income now officially taxable?
Yes. Under Revenue Ruling 2023-14, staking rewards are considered taxable income when received, though they may qualify for different rates depending on how they’re earned.
5. What are crypto ETPs and how do they differ from ETFs?
Crypto ETPs (Exchange-Traded Products) are similar to ETFs but can include other structures like trusts. They trade on stock exchanges and are backed 1:1 by crypto assets.
6. Does this mean the SEC now fully supports staking?
Not entirely, but the SEC’s August 2025 clarification confirmed that protocol-level staking is not considered a securities offering, removing a major regulatory roadblock.
7. Which cryptocurrencies are eligible for staking under the new rules?
Major proof-of-stake assets such as Ethereum (ETH), Solana (SOL), and Cardano (ADA) qualify, as long as the ETP follows approved liquidity and custody rules.
8. How could this change affect Wall Street?
It opens the door for institutional staking, allowing major asset managers to integrate crypto yield products into traditional portfolios, boosting market legitimacy.
9. When will these new rules take effect?
The policy is effective immediately, and financial institutions are expected to begin rolling out staking-enabled crypto funds by early 2026.
10. Is this good for crypto investors?
Yes. It enhances transparency, expands access to staking rewards, and strengthens the bridge between traditional finance (TradFi) and blockchain technology.