IRS issues guidance on digital asset staking safe harbor for trusts

The IRS has given crypto trusts something they have wanted for a while: permission to stake without blowing up their tax status. The agency’s staking safe harbor began with Revenue Procedure 2025-31, issued on November 10, 2025. Revenue Procedure 2026-20, published on October 6, 2026, now supersedes it and clarifies how eligible investment trusts and grantor trusts can participate in proof-of-stake networks and still keep their favorable tax treatment. What the safe harbor actually covers Staking means committing tokens to help validate a proof-of-stake blockchain in exchange for rewards. The problem for trusts was structural. Investment trusts get their tax treatment partly because they are passive vehicles. The IRS has long been wary of trusts holding a “power to vary investments”, meaning the ability to actively shuffle what they own in pursuit of profit. Staking raised an awkward question. Did choosing to stake, and collecting rewards, count as that kind of active management? If so, a trust could lose its classification and the pass-through treatment that comes with it. The IRS answer, through this guidance, is no, provided the trust plays by the rules. Compliant staking is tre...