Ethereum News Update: Regulatory Green Light for Staking—US Approves Crypto ETFs Offering 7% Returns

The U.S. Treasury Department and the Internal Revenue Service (IRS) have released landmark guidance that permits cryptocurrency exchange-traded funds (ETFs) and trusts to participate in staking digital assets and pass on the resulting rewards to their investors. This marks a major turning point for institutional involvement in the crypto sector

. The newly introduced regulations, detailed in Revenue Procedure 2025-31, create a "safe harbor" that addresses long-standing regulatory and tax ambiguities related to staking, especially for proof-of-stake (PoS) blockchains such as and . This change allows financial products on Wall Street to offer annual yields as high as 7%, a benefit that was previously unavailable due to concerns about SEC enforcement over unregistered securities .

According to the guidance, crypto trusts must meet certain requirements to be eligible for the safe harbor. These stipulations include holding only a single digital asset from a permissionless PoS network, employing a qualified custodian for managing keys, and maintaining liquidity measures to facilitate redemptions

. Trusts are also restricted to activities strictly related to staking, holding, and redeeming assets, which shields them from potential violations of securities laws. Treasury Secretary Scott Bessent stated that the new policy "encourages innovation and maintains America's leadership in digital asset and blockchain technology" .

This move fills a crucial gap left by previous regulations, where the SEC's unclear position on staking rewards—often treating them as possible earnings from others' work—kept many institutions on the sidelines

. For instance, spot Ethereum ETFs approved last year did not include staking to avoid regulatory complications, but recent developments, such as Grayscale's introduction of ETH staking services, indicate a shift in regulatory attitudes . The updated rules clarify that staking rewards are considered taxable income for trusts, which are then distributed to investors in line with current tax laws .

Industry leaders have described the new guidance as transformative. Bill Hughes, who leads global regulation at Consensys, remarked that the safe harbor "eliminates a significant legal obstacle" for fund managers and custodians, making it possible to include staking returns in regulated investment products

. This regulatory certainty is expected to drive broader adoption of PoS blockchains, with Ethereum already seeing over 30 million ETH staked and Solana offering even higher, though more unpredictable, returns . Experts anticipate a significant increase in institutional investment in crypto ETFs, as the U.S. strengthens its role as a regulatory pioneer in the digital asset industry .

The timing of this guidance is notable, coming as efforts continue to resolve the 40-day government shutdown that left IRS and SEC employees furloughed

. Although the Senate had not yet voted on a funding bill at the time of writing, the Treasury's early release of the guidance highlights the administration's dedication to advancing crypto regulation despite budgetary obstacles. Observers believe this move could set a precedent for international regulators facing similar staking issues, further reinforcing the U.S.'s leadership in blockchain technology .