U.S. Treasury and IRS Officially Allow Staking for Crypto ETFs
In a landmark development for the digital asset industry, the U.S. Treasury Department and the Internal Revenue Service (IRS) have issued new guidance under Revenue Procedure 2025-31, officially allowing U.S.-listed crypto exchange-traded funds (ETFs) to participate in staking Proof-of-Stake (PoS) assets such as Ethereum and Solana — and to distribute staking rewards directly to investors.
This long-awaited move removes regulatory uncertainty that has lingered since the rise of spot crypto ETFs, creating a clear legal pathway for funds to generate passive yield within a regulated structure. It also bridges the gap between traditional ETF investors and direct crypto holders, who have long benefited from on-chain staking rewards.
“The new guidance will enhance investor benefits, foster innovation, and keep the United States at the forefront of global digital asset and blockchain leadership.”
— Scott Bessent, U.S. Treasury Secretary, Nov 10, 2025
Key Provisions of Revenue Procedure 2025-31
Under the new framework, crypto ETFs are permitted to engage in staking activities and must distribute rewards at least quarterly to shareholders. To qualify for “safe harbor” protections, funds must adhere to several conditions:
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Maintain 85% liquidity for trading and redemptions.
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Trade exclusively on national securities exchanges.
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Conduct staking operations through independent third-party custodians.
These measures ensure that staking activities remain transparent, compliant, and insulated from the technical and operational risks typically associated with direct staking.
Passive Yield Meets Regulated Finance
The guidance allows ETFs to partner with qualified custodians such as Coinbase Custody, BitGo, or Gemini, who work with validator operators to collect and distribute staking rewards.
For investors, this means the ability to earn staking yield within traditional brokerage accounts, without managing private keys, running validator nodes, or facing direct slashing risks. In effect, it merges the yield potential of on-chain staking with the oversight and convenience of regulated finance.
Understanding Staking and Its Network Impact
Staking is the process of locking digital assets to validate transactions on PoS networks like Ethereum and Solana. Validators play a vital role in maintaining network security and consensus, receiving rewards in return.
When ETFs stake on behalf of investors, they indirectly strengthen the PoS ecosystem by expanding validator participation and stabilizing network security — all while converting those security incentives into income streams for mainstream investors.
Safe Harbor: A Framework for Transparency and Risk Control
The “safe harbor” provision offers legal and operational protection for participating funds. To qualify, ETFs must maintain high liquidity, use independent validators, and adhere to market-based staking agreements.
Importantly, the framework shields ETF assets from slashing losses (penalties for validator misbehavior) and mandates full disclosure and auditing of staking operations. This regulatory clarity not only boosts investor confidence but also sets a compliance benchmark for future digital asset funds.
Nine-Month Window for Implementation
Existing ETFs have a nine-month window to amend their trust agreements, integrate staking mechanisms, and update prospectuses. This timeline means Ethereum and Solana ETFs could begin staking by mid-2026, following internal approvals and coordination with custodial and validator partners.
The end of regulatory delays — which had pushed anticipated approvals from April to October — now clears the way for performance parity between ETFs and direct holders, ending months of investor frustration over missed staking yields.
Solana ETFs Poised to Gain Competitive Edge
Launched in late October 2025 without staking capabilities, Solana ETFs can now amend their filings to include staking features within the next nine months. Once operational, investors could gain exposure to estimated yields of 5–7% annually, based on current network conditions.
This update will make Solana ETFs far more competitive against direct holdings and earlier ETF versions lacking yield generation, adding a new dimension of return potential for regulated investors.
ETF Staking: A Win for Investors and Institutional Compliance
Staking-enabled ETFs combine passive income with the security and transparency of regulated fund structures. Investors will receive periodic (at least quarterly) staking distributions, supported by audited custodial processes and clear reporting standards.
Unlike direct staking, investors avoid the complexity of validator setup, private key management, and technical risks. The model appeals strongly to institutional participants seeking yield exposure within existing compliance frameworks.
Comparison: Staking ETFs vs. Direct Crypto Holdings
| Criteria | ETF with Staking | Direct Holding |
|---|---|---|
| Yield Distribution | Quarterly via fund | Continuous via validator |
| Technical Operation | Managed by qualified custodians | Self-managed or delegated |
| Risk Governance | Safe harbor protection, audited transparency | Depends on validator/network |
| Liquidity | 85% maintained for trading/redemption | Subject to unbonding delays |
| Custody | Independent custodians (Coinbase, BitGo, Gemini) | Self-custody or third-party |
This table illustrates the institutional-grade safeguards ETFs provide while still enabling yield generation similar to direct staking participation.
Raising the Bar for ETF Issuers
ETF issuers will need to establish independent agreements with staking operators, demonstrate market-value parity, and update fund documentation to include reward distribution methodologies.
These operational standards are expected to become a gold standard for digital asset ETFs, ensuring transparency from custody to accounting while preserving liquidity and investor protection.
Frequently Asked Questions
Which ETFs qualify for staking under the new guidance?
Any U.S.-listed crypto ETF that maintains 85% liquidity and stakes through an independent third party under market-based terms, as outlined in Revenue Procedure 2025-31.
When will investors start receiving staking rewards?
Existing ETFs have nine months to modify fund documents, meaning the first distributions could begin around mid-2026.
How frequently are staking rewards distributed?
Funds must distribute staking rewards at least quarterly through the fund’s normal dividend or distribution mechanism.
Are ETF investors exposed to slashing risk?
No. The safe harbor protects ETF assets from validator-level slashing penalties as long as staking is conducted under compliant third-party agreements.
What changes for Solana ETFs?
Solana ETFs may amend filings to include staking within nine months, enabling 5–7% annual yields for investors based on current staking conditions.
Conclusion: Staking ETFs Signal the Next Evolution of Digital Asset Integration
The U.S. Treasury’s decision to greenlight staking for crypto ETFs marks a historic step toward merging DeFi yield mechanisms with traditional finance. By providing a compliant, transparent, and accessible structure for staking participation, the guidance bridges the regulatory divide that has long separated crypto-native and institutional investors.
As Ethereum and Solana ETFs prepare to roll out staking functionality in 2026, this new model could reshape the competitive landscape for digital asset products, empowering investors to enjoy on-chain rewards — off-chain and fully regulated.
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