US grants staking safe harbour to qualifying digital-asset trusts

The safe harbour protects trust classification

Treasury Regulation section 301.7701-4(c) generally classifies a single-class investment trust as a trust only where its governing agreement gives no power to vary certificate holders’ investments. Revenue Procedure 2026-20 provides a limited safe harbour under that rule and the grantor-trust provisions. It applies to a domestic trust registered with the Securities and Exchange Commission whose interests trade on a national securities exchange and whose assets are cash plus one type of proof-of-stake digital asset.^[1][2]

Custody and staking must remain tightly controlled

The trust’s assets must remain with custodians that alone control the private keys, while the trust retains tax ownership during staking. The trustee may direct staking through unrelated providers, but the trust and sponsor cannot control a provider beyond staking and unstaking instructions. Provider selection, reward allocation and other terms must reflect due diligence and arm’s-length dealing. The trust must also be protected against slashing caused by matters reasonably within a provider’s control.^[1]

Liquidity exceptions do not permit active trading

The trustee’s permitted activities are confined to custody, creations and redemptions, paying expenses, distributions, liquidation and compliant staking. It cannot exploit market or reward variations to improve returns. A liquidity reserve may leave assets unstaked where exchange-mandated policies require them for redemptions. Temporary unstaking is also allowed for operational events, system vulnerabilities, provider changes and legal changes. A contingent liquidity facility may support near-term redemptions, but cannot be structured as a tax borrowing of digital assets.^[1][2]

Rewards must be distributed promptly

Staking may produce only additional units of the same digital asset. Units equal to net staking rewards must be distributed in kind, sold and paid out in cash, or both, within 60 days after the calendar quarter in which the trust obtains dominion and control. Existing trusts have six months from 6 October 2026 to amend agreements and processes. After that period, no trust may rely on the superseded Revenue Procedure 2025-31 safe harbour.^[1]

The procedure applies to tax years ending on or after 6 October 2026. It does not determine whether staking income is effectively connected income or unrelated business taxable income, and draws no conclusion for forks or airdrops. Trust sponsors, custodians and multinational financial groups should therefore test every section 6.02 condition separately rather than treat the guidance as a general tax approval for staking.^[1]