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IRS Clarifies Staking Safe Harbor for Trusts in New Guidance
The Internal Revenue Service (IRS) has issued updated guidance allowing eligible investment and grantor trusts in the United States to stake digital assets without jeopardizing their tax status. This clarification, outlined in Revenue Procedure 2026-20, supersedes the earlier Revenue Procedure 2025-31, which was released on November 10, 2025. The new guidance, effective from October 6, 2026, provides a structured pathway for trusts to engage in staking activities while maintaining their favorable tax treatment.
Staking involves committing tokens to validate transactions on proof-of-stake blockchains in exchange for rewards. The IRS has historically been cautious about trusts engaging in activities that could be perceived as active management, which could lead to a loss of their passive investment status. However, the IRS has determined that compliant staking can be considered a property-conservation activity, allowing trusts to retain their classification under the Internal Revenue Code.
To qualify for the safe harbor, trusts must meet 14 specific requirements, including having their interests listed on a national exchange and holding a single type of digital asset. Additionally, assets must be held by qualified custodians, and trusts must have liquidity policies approved by the U.S. Securities and Exchange Commission (SEC). Staking rewards are also subject to strict distribution rules, preventing trusts from accumulating rewards without proper management.
The guidance applies to tax years ending on or after November 10, 2025, and provides a transition period for existing trusts to amend their governing documents. This development is expected to benefit issuers of exchange-traded products that hold single proof-of-stake assets, potentially making staking a more common feature in these financial vehicles. However, trusts that do not meet all requirements or miss the amendment window will still face classification risks associated with staking activities.
Source: KLEA News