U.S. Treasury Approves Staking for Crypto ETFs

On November 10, the U.S. Treasury and IRS announced groundbreaking guidance that allows crypto exchange-traded products (ETPs) to stake digital assets and share earnings with retail investors. This marks a significant step forward in the crypto market, allowing ETFs to compete more equally with direct cryptocurrency holders by enabling passive income opportunities through staking.

Key Takeaways

The approval allows U.S.-listed crypto ETFs to stake proof-of-stake assets like Ethereum and Solana, distributing staking rewards to investors.
This decision levels the playing field, enabling investors to earn passive yields through regulated investment products.

On November 10, the U.S. Treasury and IRS released crucial guidance permitting crypto exchange-traded products (ETPs) to stake digital assets and offer rewards to individual investors. This update, encapsulated in Revenue Procedure 2025-31, provides much-needed clarity for major asset managers eager to enhance their Ethereum and Solana ETFs with yield-generating features.

Treasury Secretary Scott Bessent declared that this initiative would “increase investor benefits, enhance innovation, and maintain America’s status as the global leader in digital asset and blockchain technology.”

Scott Bessent ETF staking announcement

U.S. Treasury greenlights staking for crypto ETFs

Understanding Staking for ETF Investors

Staking involves proof-of-stake cryptocurrencies such as Ethereum and Solana, which validate transactions across their networks. Validators are rewarded for safeguarding the blockchain. Until this announcement, U.S. crypto ETFs were unable to stake assets, preventing them from accessing the yields that direct crypto holders enjoyed.

With the newly issued guidelines, ETFs now have the ability to stake their holdings through recognized custodians like Coinbase Custody, BitGo, or Gemini. These custodians will collaborate with validator operators to earn staking rewards, which the ETFs must distribute to investors at least quarterly. This advancement provides a significant advantage, as Ethereum ETF holders can now earn staking yields through conventional brokerage accounts without the hassle of managing validators or private keys.

A Long-Awaited Resolution

This moment has been highly anticipated since February, as major issuers have experienced long delays from the SEC, with decisions pushed from April to June, and then to October. Asset managers watched their non-staking ETFs fall short against direct Ethereum holdings, missing out on potential staking revenues. In September, Grayscale’s shareholders approved amendments to facilitate staking, highlighting the demand for yield-generating crypto products. Furthermore, earlier this year, BlackRock held private discussions with the SEC, fueling speculation that approval was on the horizon.

Requirements and Timeline for Compliance

The safe harbor conditions impose stringent requirements. ETFs must operate on national securities exchanges, maintain 85% liquidity for redemptions, and stake exclusively through third-party providers under arm’s length agreements. These guidelines also protect trusts from slashing penalties that can occur when validators mismanage staked assets.

Current ETFs will have a nine-month period, starting now, to adjust their trust agreements, potentially allowing Ethereum ETFs to begin staking by mid-2026.

New Opportunities for Solana ETFs

Recently launched Solana ETFs on October 28 began without staking capabilities due to regulatory uncertainty. However, the latest guidelines present a solid framework for these issuers; they can now revise their trust agreements within the nine-month timeframe to incorporate staking. This addition will enable investors to access SOL’s attractive yields, which can range from 5-7% annually, complementing the existing Ethereum funds.

The guidance signifies a major evolution in U.S. crypto regulation, empowering asset managers to offer institutional-level staking opportunities through traditional investment products, finally allowing them to compete with direct cryptocurrency ownership.