U.S. Treasury Greenlights Crypto Staking for Wall Street Products

The U.S. Treasury Department and IRS issued new guidance Monday that establishes a clear safe harbor for investment trusts to stake digital assets without risking regulatory violations. This move represents a significant shift in the federal government’s approach to proof-of-stake blockchain networks, effectively greenlighting institutional staking activities that had previously operated in a legal gray area. The guidance specifically addresses the regulatory uncertainty that had prevented Wall Street-traded crypto products from incorporating staking rewards into their offerings.

To qualify for the safe harbor protection, investment trusts must meet several specific criteria: they can hold only one type of digital asset from a permissionless, proof-of-stake blockchain network; must follow established liquidity protocols; cannot perform functions beyond holding, staking, and redeeming the specific token; and must rely on both a custodian and an independent staking provider to handle the staking process. These requirements are designed to ensure proper oversight and risk management while enabling institutional participation in staking activities.

U.S. Treasury Secretary Scott Bessent publicly celebrated the guidance, emphasizing its importance for maintaining American leadership in digital asset technology. “This move increases investor benefits, boosts innovation, and keeps America the global leader in digital asset and blockchain technology,” Bessent wrote on social media platform X. His statement underscores the administration’s view that clear regulatory frameworks are essential for fostering innovation while protecting investors.

Bill Hughes, head of global regulation at Ethereum software giant Consensys, highlighted the practical implications of the new guidance. “The impact on staking adoption should be significant,” Hughes said Monday. “It effectively removes a major legal barrier that had discouraged fund sponsors, custodians, and asset managers from integrating staking yield into regulated investment products.” This sentiment was echoed by Patrick Witt, executive director of President Donald Trump’s Council of Advisors for Digital Assets, who noted the guidance stemmed from recommendations in a White House report on crypto released earlier this summer.

The new guidance resolves a longstanding regulatory question that had vexed industry leaders for years. During the Biden administration, the SEC had indicated that staking rewards could potentially be considered profits derived from the efforts of others, which would classify them as unregistered securities under U.S. law. This uncertainty was evident when the SEC approved spot Ethereum ETFs last year without allowing staking functionality, reflecting the regulatory caution that had characterized previous approaches.

Proof-of-stake networks like Ethereum and Solana depend on users depositing native tokens to ensure network security and functionality. In return for staking their tokens and helping maintain network operations, users receive rewards that typically range from 1.8% to 7% annual percentage yield, depending on the specific network and amount staked. These yields represent a significant potential revenue stream that had remained largely inaccessible to institutional investors due to regulatory concerns.

The timing of this guidance follows Grayscale’s recent move to become the first U.S. ETF issuer to offer ETH staking rewards to holders. With the new safe harbor in place, such offerings are expected to become far more common across Wall Street as traditional financial institutions gain the regulatory certainty needed to incorporate staking into their product offerings. This development marks a crucial step in bridging the gap between traditional finance and the cryptocurrency ecosystem, potentially accelerating mainstream adoption of proof-of-stake blockchain technology.