IRS Issues Revised Guidance on Trusts Staking Digital Assets

The Treasury, together with the IRS, released Revenue Procedure 2026‑20 on October 6, 2026 to amend the safe‑harbor framework for investment and grantor trusts staking digital assets. Key changes include: recognition of delegated staking without ownership transfer; a protocol‑specific threshold for compromising consensus; removal of an SEC‑approval filing requirement in favor of registration‑statement disclosure; allowance for multiple custodians; clarified indemnification for slashing losses; and permissive treatment of staking rewards—whether new coins or transaction fees—as either cash or in‑kind distributions. The guidance also eliminates a borrowing‑based contingent‑liquidity exception and reduces the grace period for implementing the safe‑harbor from nine to six months, with an additional six‑month extension for trusts already compliant. Firms advising trusts engaged in digital‑asset staking must review trust agreements and operational processes to ensure compliance, assess custodial arrangements, and update disclosure language. Clients should monitor whether the SEC adopts these disclosures and stay alert for potential court interpretations that may further shape how trusts can safely stake crypto assets under existing tax law.