US revises staking safe harbour for digital-asset investment trusts

Preserving trust classification

Revenue Procedure 2026-20 clarifies, modifies and supersedes Revenue Procedure 2025-31. Its safe harbour allows an arrangement that already qualifies as both an investment trust under Treasury Regulation section 301.7701-4(c) and a grantor trust to authorise staking and stake its digital assets while retaining those classifications. The distinction matters because the regulation generally denies investment-trust treatment where trustees have power to vary certificate holders’ investments.^[1][3]

A narrow operating framework

The trust must be exchange traded, hold only cash and one type of proof-of-stake digital asset, and satisfy the disclosure and liquidity requirements in the procedure. One or more custodians must hold the assets and control their private keys, while the trust retains ownership. The trustee’s permitted activities are tightly specified; the trust agreement must prohibit seeking gains from market variations in asset values or staking rewards.^[1]

Staking providers must be unrelated to the trust and sponsor, with due diligence, arm’s-length rewards allocations and contractual terms. The trust, sponsor and custodian cannot direct the provider’s activities beyond permitted staking and unstaking instructions. Protection against slashing must cover events reasonably within the provider’s control or ability to prevent. These conditions make custody and provider-contract design part of the tax-classification assessment.^[1]

Liquidity, distributions and transition

The rules permit a liquidity reserve and specified temporary unstaking, including for redemptions and protective action against network vulnerabilities. A qualifying contingent liquidity arrangement may involve borrowing cash or buying and selling digital assets, but excludes transactions the trust treats as borrowing digital assets for federal income tax purposes. Rewards must take the same asset form; equivalent units, or their cash proceeds, must be distributed proportionately within 60 days after the relevant calendar quarter, net of expenses.^[1]

The procedure applies to tax years ending on or after 6 October 2026. Existing eligible trusts have six months after that date to implement its requirements, and trusts remaining compliant with the prior safe harbour may rely on it during that transition. Asset-management groups should examine governing documents, custody and staking contracts, liquidity procedures and distribution timing together. The procedure expressly leaves other tax questions unresolved, including effectively connected income and unrelated business taxable income, so preserving trust classification does not determine the wider tax treatment of staking receipts.^[1]