A new safe harbor announced by the US Internal Revenue Service on Monday is seen as an important step in allowing cryptocurrency exchange-traded products (ETPs) to share staking rewards with their investors.
Under certain conditions, the new guidance allows trusts to “stake their digital assets without jeopardizing their tax status as investment trusts and grantor trusts for federal income tax purposes,” according to the IRS document, which took effect immediately. Under proof-of-stake consensus mechanisms, network participants stake or “stake” some of their cryptocurrencies: Ethereum or other cryptography, to protect the network, and they receive a return for it.
Treasury Secretary Scott Bessent posted on social media site
He said it “increases returns for investors, drives innovation, and maintains the United States as the world leader in digital assets and blockchain technology,” echoing routine sentiments from President Donald Trump and his promises that the United States will become the world leader in crypto.
“It effectively removes a major legal barrier that had deterred fund sponsors, custodians and asset managers from integrating staking performance into regulated investment products,” said Bill Hughes, senior advisor and head of global regulatory affairs at Consensys, in his own post on
Betting had been an ongoing issue since the arrival of cryptocurrency exchange-traded products (ETFs), which brought a new wave of investment in digital assets. The practice has come up in conversations across the spectrum of debates about US crypto policing, and the Securities and Exchange Commission clarified earlier this year that gambling is not against securities law.
Read more: Crypto Coalition tells SEC that gambling is an ‘essential good’, not a value
The IRS guidance is aimed at permissionless proof-of-stake networks.
“The impact on betting adoption should be significant,” Hughes said, saying the guidance “provides long-awaited regulatory and tax clarity.”
The IRS cryptocurrency office had recently gone through a major leadership turnover, losing a series of managers this year as the Trump administration cut staff and resources at the tax agency. The IRS did not respond to media questions about whether the office continues to operate as before.
Read More: IRS Crypto Work Chief Exits as US Tax Changes Loom for Digital Assets
Siamak Masnavi contributed reporting.
