Yes—but only under a narrow, conditional safe harbor. IRS Revenue Procedure 2026-20 says that a trust within its scope can authorize staking without losing its federal tax classification as an investment trust and grantor trust, provided it satisfies every listed requirement. The rule does not cover all crypto trusts, direct holders, or staking arrangements generally.
Which crypto trusts can use the safe harbor?
The current authority is IRS Revenue Procedure 2026-20, issued October 6, 2026. It clarifies, modifies, and supersedes Revenue Procedure 2025-31. Its safe harbor is for a state-law trust that already qualifies as both an investment trust under Treasury Regulation § 301.7701-4(c) and a grantor trust immediately before it meets the procedure’s staking conditions.
The trust must also meet these structural requirements:
- Exchange trading and SEC disclosure: The trust’s interests must trade on a national securities exchange. Its staking disclosure must appear in an effective SEC registration statement and remain subject to SEC oversight.
- Eligible assets: The trust may hold cash and units of only one type of digital asset. Transactions in that asset must take place on a permissionless network that uses proof-of-stake consensus.
- Custody: One or more custodians must hold the assets and control the relevant private keys. The procedure states that the trust remains the federal tax owner of assets while they are staked.
These limits matter: the procedure does not establish a safe harbor for every digital asset, trust structure, or network.
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What must the trust and its staking provider do?
Keep the trust’s purpose and activities limited
Staking must serve to protect and conserve trust property. The trust’s activities must remain within the procedure’s listed trust functions, such as holding assets, processing creations and redemptions, paying expenses, distributing assets, liquidating, and directing permitted staking. It may not seek to improve holders’ investments by taking advantage of market variations.
Maintain independence and arm’s-length terms
The trust and its sponsor must be unrelated to the staking provider. The trustee, sponsor, or custodian must conduct appropriate due diligence, and both the provider arrangement and the allocation of rewards must be arm’s length. The trust and custodian may not control the provider’s activities beyond giving permitted staking and unstaking directions.
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Protect the trust against specified slashing risk
Consistent with fiduciary obligations, the trust must be indemnified against slashing caused by activities or events reasonably within the provider’s control or ability to protect against. This requirement is about specified provider-related risks; it is not a statement that staking is risk-free.
The IRS sets out the detailed conditions in Revenue Procedure 2026-20.
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How do liquidity rules affect staking?
The trust must maintain written liquidity risk policies that comply with exchange requirements. Those policies matter because staking can make assets temporarily unavailable for redemptions or distributions. The procedure permits a liquidity reserve when needed under those policies, identifies circumstances in which assets may temporarily remain unstaked, and permits qualifying contingent liquidity arrangements for near-term distributions. Applicable assets generally must be made available for staking as soon as reasonably possible after the relevant circumstance passes.
The procedure discusses two figures in the context of exchange liquidity standards. They should not be read as a general staking limit:
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| Figure | What the IRS procedure says | How to read it |
|---|---|---|
| 85% | If less than 85% of a trust’s assets are readily available to meet redemption requests on a daily basis, the exchange listing standards described in the procedure require written liquidity risk policies and procedures, with disclosure. | A threshold discussed in connection with liquidity policies—not permission to stake a fixed share of assets. |
| 15% | The procedure identifies staked assets exceeding 15% of trust assets, when they are not readily available for redemption within one business day, as particularly relevant to liquidity disclosure. | Not a universal 15% cap on staking. |
Both figures are described by the IRS in Revenue Procedure 2026-20; their application depends on the exchange’s liquidity requirements and the trust’s circumstances.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How must staking rewards be handled?
Net staking rewards must be allocated proportionately to holders and distributed in the same form as the trust’s single type of digital asset. The trust may distribute them in kind, sell them for cash before distribution, or use a combination of those methods. Distribution is due no more than 60 days after the end of the calendar quarter in which the trust gains dominion and control over the rewards, under Revenue Procedure 2026-20.
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When does the procedure apply, and what is the transition period?
Revenue Procedure 2026-20 applies to tax years ending on or after October 6, 2026. A trust within scope has six months from that date—through April 6, 2027—to implement the requirements, including by amending its trust agreement, revising its processes and procedures, or both.
A trust that complied with Revenue Procedure 2025-31, or complies with the clarified and modified requirements, may continue to rely on the earlier safe harbor during that same six-month transition period. After the period ends, the 2025 procedure may no longer be relied on. The IRS’s 2026 procedure is the controlling guidance as of October 7, 2026.
What tax questions does this safe harbor leave open?
The safe harbor concerns whether qualifying staking prevents a covered trust from being classified as an investment trust and grantor trust. It does not determine whether staking income is effectively connected income or unrelated business taxable income, and it does not settle the tax treatment of other digital-asset events such as forks and airdrops. The tax treatment of rewards for a particular holder is a separate question; the IRS’s digital assets guidance includes Revenue Ruling 2023-14 on the taxability of staking income.
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