IRS Updates Staking Safe Harbor Guidance for Crypto Trusts

The IRS has issued Revenue Procedure 2026-20, which provides a framework for investment and grantor trusts to engage in staking on proof-of-stake networks. This updated guidance supersedes Revenue Procedure 2025-31, which was originally released on November 10, 2025.

For trusts, the primary concern regarding staking has been the potential loss of favorable tax treatment. Investment trusts are generally required to remain passive vehicles. There was uncertainty regarding whether the act of staking and collecting rewards constituted active management, which could be interpreted as a power to vary investments and lead to a loss of pass-through tax status.

Under the new guidance, compliant staking is classified as a property-conservation activity. This designation allows trusts to maintain their status under IRC §§ 671–677, provided they adhere to 14 specific requirements.

These requirements include that the trust must hold only a single type of digital asset and its interests must be listed on a national exchange. Additionally, assets must be held by qualified custodians, and the trust must maintain liquidity policies approved by the SEC. There are also strict rules governing the distribution of staking rewards.

The guidance applies to tax years ending on or after November 10, 2025. A transition period was provided for existing trusts to amend their governing documents, with a nine-month window that concluded around August 10, 2026.

This development provides a clearer path for issuers of single-asset exchange-traded products to incorporate staking. However, the safe harbor does not extend to multi-token baskets, and trusts that fail to meet all 14 conditions or missed the amendment window remain subject to the original classification risks.