IRS & Treasury: Staking Crypto Now Legal? 😱 #BlockchainBureaucracy

Key Highlights

The U.S. Treasury and IRS, like weary travelers at last finding a inn, have issued guidance permitting crypto ETPs to stake Ethereum, Solana, and other tokens-finally.
Staking rewards may now be distributed to investors, provided they dance carefully within the confines of Revenue Procedure 2025-31, lest they trip on tax code landmines.
Treasury Secretary Scott Bessent declared this move “boosts innovation,” as if America’s blockchain leadership weren’t already secure, thanks to 401(k)s and hot dogs.

In a moment that could only be described as historic (if “historic” means a government agency finally catching up to 2018), the U.S. Treasury Department and IRS have sanctioned crypto exchange-traded products (ETPs) to stake proof-of-stake (PoS) assets like Ethereum and Solana. One imagines the bureaucrats drafting this policy while sipping lukewarm coffee, their eyes glazed over spreadsheets titled “Blockchain: A Threat or a Tax Opportunity?”

The guidance, released Monday under the name Revenue Procedure 2025-31, offers a safe harbor for trusts holding stakable digital assets-if they follow strict rules. It’s the regulatory equivalent of a tightrope walk: balance the thrill of yield generation with the dizziness of compliance.

A Clear Path to Staking (Or a Maze)

Treasury Secretary Scott Bessent, ever the optimist, touted the policy on X, claiming it “increases investor benefits” and “keeps America the global leader in blockchain tech.” One might ask, “Leader in what, exactly? Mining metaphors?” But hey, progress!

The new framework allows regulated funds to generate yield via staking-a process where tokens are locked up to secure blockchains, earning rewards-without violating tax or securities laws. It’s like letting a child hold a lit match, provided they wear 20 layers of fireproofing.

What the New Rules Require (A Checklist for the Brave)

To qualify under the safe harbor, eligible ETPs and trusts must:

Single-asset focus: Hold only one digital asset and cash, as if diversification were a sin.
Qualified custodians: Use licensed custodians to manage keys and staking. Because nothing says “trust” like outsourcing your private keys.
Liquidity requirements: Maintain 85% liquidity, even when 15% is locked in staking. A balancing act worthy of a circus.
Independent staking providers: Work with outside stakers under fair agreements. No conflicts of interest allowed, unless you enjoy legal drama.
No discretionary trading: Funds must simply hold, stake, and redeem. No fancy footwork, please.

These conditions ensure staking remains a “passive activity,” preserving the fund’s tax status. One wonders if “passive” is code for “don’t innovate too much, or we’ll tax you out of existence.”

Industry Cheers (With a Side of Relief)

The crypto and asset management industries greeted the news with glee, as if someone had finally explained how to use a VHS player. Bill Hughes of Consensys called it “long-awaited regulatory and tax clarity,” which is just a fancy way of saying, “We’re not all going to prison for this.”

Under the safe harbor announced by @SecScottBessent, trusts may stake digital assets if they:

1) Hold only one digital asset type and cash;

2) Use a qualified custodian to manage keys and execute staking;

3) Maintain…

– Bill Hughes 🦊 (@BillHughesDC) November 10, 2025

Hughes praised the safe harbor for removing a “major legal barrier,” which is code for, “We can now charge fees for doing the same thing as before, but with a side of yield.” Analysts predict this will accelerate staking-enabled ETFs, letting Wall Street investors earn rewards through traditional brokers. Imagine that: the future, delivered via a spreadsheet.

What Staking Means for Investors (Or, “Why You Should Care”)

Proof-of-stake blockchains like Ethereum and Solana reward validators who lock up tokens. Staking yields typically range from 1.8% to 7% annually-if you survive the paperwork. Before this guidance, U.S. funds couldn’t stake without risking regulatory wrath. Now, investors can earn rewards through ETFs, sans wallets, keys, or the need to understand what a “validator” does.

From Gray Zone to Green Light (With a Side of Drama)

This shift follows the SEC’s September approval of crypto ETF listing standards. Now, with IRS and Treasury’s blessing, the green light is fully on. Agencies even referenced the SEC’s rules, proving that inter-agency cooperation exists-when it suits them.

Policy Amidst Government Shutdown Shenanigans

The timing raised eyebrows, arriving as lawmakers ended a 40-day government shutdown. Yet, even as furloughed employees sipped stale coffee, the Treasury pushed forward. Patrick Witt of Trump’s crypto advisory council praised the move, linking it to a White House report. One suspects the real heroes here are the interns who kept the internet running during the chaos.

A Turning Point (For Now)

Analysts call this a turning point for institutional crypto. With clear rules, big players can stake via ETFs, bolstering blockchain security and market flow. As Hughes noted, “Staking is now a legitimate, conservative yield strategy.” Conservative? Yes. Legitimate? Well, as long as the IRS says so.

How Far We’ve Come (From Chaos to Compliance)

Crypto advocates marveled at the contrast between today’s clarity and past regulatory confusion. Two years ago, SEC Chair Gary Gensler labeled proof-of-stake tokens as securities. Now, Treasury Secretary Bessent blesses staking in ETFs. Progress, it seems, is a pendulum swing-sometimes backward, sometimes forward, but always punctuated by bureaucratic theater.

The Bottom Line (In Case You’ve Forgotten)

Revenue Procedure 2025-31 is a milestone for crypto integration. By allowing ETFs and trusts to stake assets, the Treasury and IRS have transformed staking from a niche risk into a tax-compliant investment strategy. What was once a crypto-native quirk is now Wall Street’s latest obsession-complete with spreadsheets, compliance officers, and a side of existential dread.

2025-11-11 11:20