U.S. Treasury and IRS Allow Crypto ETPs to Stake Assets and Share Rewards Directly With Investors

U.S. Treasury Clears Path For Crypto ETPs To Stake Digital Assets And Share Rewards

The United States has taken a defining step in digital asset regulation as the Department of the Treasury and the Internal Revenue Service (IRS) formally allowed cryptocurrency exchange-traded products (ETPs) to stake underlying tokens and distribute staking rewards directly to retail investors.

The long-awaited clarification removes years of uncertainty for fund issuers and investors seeking yield exposure within regulated markets.

Announced by Treasury Secretary Scott Bessent via X, the new framework gives ETP issuers “a clear path to stake digital assets and share staking rewards with their retail investors.”

Bessent wrote,

“This move increases investor benefits, boosts innovation, and keeps America the global leader in digital asset and blockchain technology.”

New Guidance Opens The Door To On-Chain Yield

Until now, U.S. crypto ETPs were largely limited to holding spot assets such as Bitcoin and Ethereum, unable to participate in staking due to regulatory ambiguity.

The new Treasury and IRS framework — known as Revenue Procedure 2025-31 — reverses that restriction by providing a defined structure for staking within ETPs while maintaining oversight and tax compliance.

The 18-page document establishes a safe harbour that allows trusts to stake digital assets on permissionless proof-of-stake (PoS) networks, provided they meet conditions such as holding only one type of crypto asset plus cash, and using a qualified custodian.

According to Bill Hughes, senior counsel at Consensys,

“This safe harbor provides long-awaited regulatory and tax clarity for institutional vehicles such as crypto ETFs and trusts, enabling them to participate in staking while remaining compliant.”

He added that the update “transforms staking from a compliance risk into a tax-recognised, institutionally viable activity, accelerating mainstream adoption across proof-of-stake blockchains.”

How Staking Works And Why It Matters

Crypto ETPs function much like exchange-traded funds (ETFs), offering investors regulated exposure to digital assets without requiring them to hold the tokens directly.

They are traded on traditional stock exchanges and backed by crypto held in custody.

Staking, in contrast, involves locking digital assets on a blockchain network to validate transactions and maintain network security.

In return, participants earn staking rewards — typically in the same token.

With this policy, ETPs holding assets such as Ethereum (ETH), Solana (SOL), or Cardano (ADA) can now stake those tokens and distribute the returns to investors through regulated structures similar to dividend payouts.

The guidance builds upon Revenue Ruling 2023-14, which set out the tax treatment for staking rewards, further harmonising crypto taxation with existing financial norms.

A Turning Point For U.S. Crypto Regulation

This update follows the Securities and Exchange Commission’s (SEC) August 2025 clarification that protocol-level staking and “staking receipt tokens” are not securities, unless tied to an investment contract.

That statement helped lay the groundwork for the Treasury’s decision to formally integrate staking into compliant financial products.

Industry analysts believe the change will boost institutional adoption of PoS assets and drive inflows into new staking-based funds.

Many expect issuers to explore Ethereum, Solana, and Cardano-focused ETPs that combine capital exposure with on-chain yield potential.

With this move, the U.S. now stands ahead of other major jurisdictions in embedding staking within its regulatory perimeter — a position that could attract significant global capital and further strengthen its dominance in digital finance.

Government Shutdown Nears End As Markets Rebound

The announcement comes amid optimism that the U.S. government’s record-breaking 41-day shutdown may finally end.

On 9 November, the Senate advanced a bipartisan compromise bill with a 60-40 vote, marking the first major breakthrough after 14 failed attempts.

Senate Majority Leader John Thune said,

“After 40 long days, I’m hopeful we can bring this shutdown to an end.”

The bill would fund key agencies for the full fiscal year and extend support programmes through January 2026.

As uncertainty begins to fade, markets have started to show renewed confidence.

Bitcoin, Ethereum, Solana, and Avalanche have all seen price recovery, a trend analysts say could be reinforced by the Treasury’s new staking framework as investor optimism returns.

Regulation That Sparks Real Adoption

From Coinlive’s perspective, the Treasury’s move signals a shift from theoretical policy debates to actionable frameworks that invite mainstream capital into proof-of-stake networks.

By formalising staking within regulated ETPs, the U.S. is not just legitimising on-chain yield — it is integrating it into the language of traditional finance.

This could bridge the divide between crypto and Wall Street faster than any ETF approval ever could.

If the policy is executed with transparency and consistency, it could redefine how global markets perceive blockchain utility — not as speculation, but as infrastructure capable of rewarding participation and trust.