IRS Updates Staking Safe Harbor for Crypto Investment Trusts

To qualify, trusts must be formed under state law, trade on a national securities exchange, and file required disclosures with the Securities and Exchange Commission. The IRS dictates that assets must be held by independent custodians who engage with third-party staking providers on arm’s length terms. While the guidance permits trusts to stake assets to protect against network centralization, it allows for specific liquidity reserves, enabling trustees to keep assets unstaked to meet redemption demands or cover operational expenses.

Staking rewards are subject to precise distribution requirements, necessitating that equivalent units or cash proceeds be returned to shareholders within 60 days of the quarter’s end. Existing trusts operating under the previous 2025 framework have a six-month transition period from October 6 to align their structures with these new requirements. The IRS emphasized that this guidance is narrowly tailored; it does not constitute a general tax exemption for staking income nor does it resolve broader tax uncertainties regarding forks, airdrops, or unrelated business income.