The US Treasury and IRS issue guidance allowing Wall Street crypto products to offer staking rewards under a new safe harbor, easing institutional participation
Treasury’s approach to crypto has moved from proposed broker-style tax reporting to finalized reporting rules for custodial platforms, creating a more explicit compliance framework around institutional-facing activity.
The new guidance adds a product-design accommodation within that broader framework. It follows earlier efforts to treat exchanges more like regulated intermediaries through proposed crypto-gains reporting rules.
First-order effects
Sponsors of Wall Street crypto products gain a defined safe-harbor path to include staking rewards, reducing uncertainty around offering that feature.
Institutional participants can assess staking-enabled products against clearer Treasury and IRS guidance rather than treating the tax and compliance treatment as unresolved.
Second-order effects
Custodians, product issuers, and compliance teams will need to align staking operations and disclosures with the safe harbor, making operational compliance a more visible competitive requirement.
Rival investment products without staking rewards may face pressure to add comparable yield features where their structures can meet the new guidance.
Third-order effects
If regulators continue pairing reporting obligations with bounded safe harbors, crypto’s institutional market could develop through standardized, compliance-led product structures rather than regulatory ambiguity.
The result may deepen the divide between products that can fit regulated financial channels and crypto activity that remains outside those channels.
The trend: This is one data point in the gradual integration of crypto products into conventional financial compliance frameworks, with regulated access expanding alongside reporting and oversight.
@secscottbessent
Treasury Secretary Scott Bessent on x
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
@billhughesdc
Bill Hughes on x
Under the safe harbor that @SecScottBessent announces below, trusts may stake digital assets (on permissionless proof-of-stake networks) if they: 1) Hold only one digital asset type and cash; 2) Use a qualified custodian to manage keys and execute staking; 3) Maintain
@0xbonzo
@0xbonzo on x
Huge win for #Ethereum 🙌🏼 New IRS/Treasury guidance could drive massive retail adoption, increase liquidity, & locking up more ETH supply. Bullish af for $ETH long-term! 🚀 🦇🔊
@thomasuhm
Thomas Uhm on x
Many thanks to @USTreasury and @IRSnews for providing this critical clarity into the ability of ETFs to stake within a Grantor Trust. This removes the final major hurdle for staking within ETFs from a regulatory perspective. @jito_sol ETF staking szn fully on!
@kmsmithdc
Kristin Smith on x
Thank you @SecScottBessent. This is a critical and important development for issuers and investors of crypto ETPs. Next up: We need staking rewards for all taxpayers to be taxed fairly by removing harmful Biden-era policies that lock up innovation.
@jseyff
James Seyffart on x
Honestly did not think this would settled via a tweet from the treasury secretary lol
@xethalis
Greg Xethalis on x
On the last point, this is interesting. You can have “mixed digital asset” grantor trusts where a trust starts out with 1:0.1:0.01 SOL:ETH:BTC and this appears to not allow such a grantor trust to stake as the ratio of the mixed digital asset basket would fluctuate.
@thinkingcrypto1
Tony Edward on x
BULLISH! US Treasury and IRS give clarity for staking in ETFs!
@xethalis
Greg Xethalis on x
They are allowing both liquidity reserves that can be altered AND liquidity management arrangements (e.g., financing to facilitate redemptions) [image]
@xethalis
Greg Xethalis on x
A couple of areas with less flexibility: - Staking providers must be independent of the Trust and its Sponsor (but not its Custodian) (i.e., no affiliated staking providers) - Staking providers *must* indemnify against slashing - Must receive staking rewards in the same form of […
@solanainstitute
@solanainstitute on x
Thank you @USTreasury and the @IRSnews for this critical step towards clear crypto tax treatment.
@sjdedic
Simon Dedic on x
A few years ago, I wouldn't even have dared to dream about news like this. Nowadays, it's just another announcement the market barely reacts to. The fundamentals are getting stronger by the day, slowly but surely opening the doors for the flood of institutional capital that'll
@dzambhalahodl
Steven Lubka on x
It's interesting Bessent personally tweeted this, speaks to relative priorities
@chadsteingraber
Chad Steingraber on x
New US Treasury guidance allows crypto ETF's to participate in staking (would be similar as if they were Dividends). Past actions and statements⬇️ November 2022: Treasury Secretary Janet L. Yellen identified key risks in crypto markets, including comingling of customer assets, [i…
@xethalis
Greg Xethalis on x
This is a lot of flexibility. The IRS has followed the GLS and staking guidance frameworks to afford reasonable flexibility within a mostly inflexible grantor trust requirement, because this is in the best interest of the trust beneficiaries. [image]
@ericbalchunas
Eric Balchunas on x
Safe to say this is the first time Treasury secretary has tweeted about ETFs 🔥