The institutional crypto market has just reached a major milestone. The US Treasury and IRS now allow crypto ETFs and trusts to participate in staking and redistribute rewards to their investors. This decision could well shake up the world of investing in digital assets.
In brief
- The US Internal Revenue Service (IRS) now allows crypto ETFs and trusts to practice digital asset staking.
- Exchange-traded products will be able to share staking rewards directly with their retail investors.
- This regulatory clarification removes a major obstacle that was slowing the institutional adoption of staking.
The USA authorizes staking for crypto ETFs
Treasury Secretary Scott Bessent made this major development official on Monday. Federal agencies now provide “a clear path” for exchange-traded products to stake digital assets.
Concretely, crypto ETFs can now generate additional returns via staking and redistribute them to their investors. A boon for an institutional market which has been demanding this clarification for months.
The conditions imposed remain strict, but consistent. Trusts must be listed on a national securities exchange. They can only hold cash and a single type of digital asset, held with an approved custodian.
Risks for investors must also be clearly mitigated. A rigorous framework which aims to protect individuals while freeing the potential of institutional staking.
Bill Hughes, senior advisor at Consensys, welcomes a “significant” step forward for the adoption of staking. “ This secure regulatory framework provides long-awaited clarity “, he explains. Fund promoters, custodians and asset managers can now integrate staking income into their products without fear of sanctions. A major legal obstacle has just fallen.
This decision follows on from the SEC's approval last September of generic listing standards for crypto ETFs.
The IRS and Treasury took this change directly into account when updating their recommendations. Interagency coordination which demonstrates a political will to supervise rather than slow down financial innovation.
Solana leads the way with high-yielding ETFs
The timing of this announcement coincides with a revealing phenomenon. Since the end of October, Bitwise's Solana ETF (BSOL) has gotten off to a spectacular start. More than 545 million dollars flowed in in less than two weeks, including 30 million in a single day.
This success can be explained by its innovative structure. The ETF offers full staking with an annual return of 7%, without investors having to directly hold the asset. A game-changing model for traditional financial institutions, now capable of generating passive income while respecting the regulatory framework.
The contrast with existing products is striking. While BSOL has been raising capital, Bitcoin ETFs have lost $2.1 billion and Ethereum ETFs lost $579 million over the same period. Asset managers clearly favor blockchains offering built-in yield rather than simple price exposure. Grayscale understood this well by launching its own Solana ETF (GSOL), which already totals $114 million.
The new IRS guidelines will amplify this trend. Bitcoin and Ethereum ETF issuers will soon be able to offer “staking” versions of their products. The potential is considerable: on Ethereum, where 28% of the total supply is staked, returns range between 3% and 4% per year. A substantial source of income for funds managing several billions.
The United States is thus opening a new era for institutional crypto investment. By authorizing staking for ETFs, Washington is transforming these products into real yield generators. The race for high-yielding crypto ETFs is only just beginning.
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