IRS Clears Crypto ETFs to Stake Their Assets and Share the Rewards
Updated: 6 days ago
On 6 October 2026 the IRS issued Revenue Procedure 2026-20, updating and superseding its earlier safe harbor so that single-asset crypto exchange-traded products structured as grantor trusts can stake proof-of-stake tokens and pass the rewards to investors without jeopardising their tax treatment.
What the guidance allows
Revenue Procedure 2026-20 clarifies, modifies and supersedes the prior safe harbor, addressing which proof-of-stake protocols qualify, the use of multiple custodians, slashing protection, unstaking before distributions, the treatment of staking rewards and digital-asset borrowing.
The conditions are strict: the trust must trade on a national securities exchange, disclose staking in an effective SEC registration statement, hold only cash and one type of proof-of-stake asset, stake through unrelated providers on arm's-length terms, and generally stake at all times.
Why it is a big deal for ETFs
Until now, trust-structured US crypto ETPs largely had to leave staking yield on the table. Ethereum staking has run in the low-single-digit percentages and Solana higher, so passing those rewards through makes a staking ETF materially more attractive than a plain spot fund.
It is another brick in 2026's institutional-crypto buildout, sitting alongside new custody frameworks and a wave of single-asset fund launches. Real yield, not just price exposure, is now in play for mainstream investors.
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For asset managers, 'yield' has just become a headline. Expect staking ETFs to compete openly on net rewards after fees, and expect the marketing to get louder as issuers race to differentiate.
Our take: the battleground shifts from 'access to crypto' to 'what your crypto earns'. The brands that win will explain net yield and the risk of slashing in plain English, because the fund that over-promises and under-discloses will be the one regulators and customers remember.
Quick FAQ
What is staking?
Locking up proof-of-stake tokens to help secure a blockchain in return for rewards, broadly similar to earning a yield on an asset.
Which funds benefit most?
Single-asset proof-of-stake ETPs, most obviously Ethereum and Solana funds structured as grantor trusts.
What is the catch?
Tight conditions: exchange listing, SEC-disclosed staking, a single asset type, independent custodians and validators, and slashing protections.
This is the moment crypto ETFs stop being a parking space and start being a productive asset. For marketers the pitch moves from 'get exposure to Ethereum' to 'earn on your Ethereum', and the brands that win will be the ones that explain net yield, and the risks behind it, in plain English. — Daniel Nikolla, Founder of Merx Marketing
The staking green light turns yield into the next marketing battleground for crypto funds, and clear, honest communication of net rewards and risk will decide who earns investor trust.
If your product could suddenly advertise a yield, how clearly could you explain where it comes from, and what could go wrong?
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Sources: IRS Revenue Procedure 2026-20, The Block, Accounting Today, Crypto Briefing, Lowenstein Sandler Crypto Brief.
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Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
