The IRS published Revenue Procedure 2026-20 on October 6, 2026, replacing its November 2025 predecessor and giving investment and grantor trusts a defined compliance path for staking proof-of-stake assets without losing their tax status.

The updated procedure addresses a structural tension that has followed these structures since proof-of-stake networks entered mainstream capital markets. Investment trusts keep their tax treatment in part because the IRS treats them as passive vehicles. A trust that holds a "power to vary investments" risks disqualification. Staking, by design, requires an active choice to validate transactions and collect rewards.

The new answer, classified by the new guidance, is no, provided the trust plays by the rules. Compliant staking is treated as a property-conservation activity. That framing preserves investment-trust status and grantor-trust status under IRC §§ 671–677.

What does the ruling change?

The October 2026 procedure resolves a question that had kept fund sponsors cautious: does selecting a staking strategy cross into active management? By treating staking as property conservation rather than investment variation, the IRS has drawn the relevant line on behalf of compliant vehicles.

The clarification gives trust counsel something to cite, replacing an interpretive gray area with a defined set of operational conditions. For issuers weighing staking features in single-asset vehicles, the guidance converts a tax risk into a checklist.

What are the 14 requirements?

The safe harbor is conditional. Trusts must satisfy 14 detailed criteria, among them:

• The trust's interests must be listed on a national securities exchange
• The trust must hold a single type of digital asset
• Assets must sit with qualified custodians
• The trust must maintain liquidity policies approved by the SEC
• Staking rewards face strict distribution requirements

The dependency on SEC-approved liquidity policies binds the tax benefit to securities regulators' continuing oversight. A trust whose product falls outside that regime cannot use the safe harbor.

The single-asset requirement rules out multi-token baskets. Funds that hold diversified digital-asset portfolios do not fit within the structure. Reward distribution rules also prevent trusts from accumulating staking income as a discretionary pool; the guidance treats that approach as inconsistent with passive status.

What is the timeline?

Revenue Procedure 2026-20 applies to tax years ending on or after November 10, 2025. The October 6, 2026 publication date also marks a relevant effective date under the updated procedure.

Trusts that complied with the original November 2025 release received a nine-month amendment window to revise governing instruments that prohibited or ignored staking. That period closed around August 10, 2026.

The amendment window mattered because many trust documents predated any IRS posture on staking. Some barred it outright. The transition gave trustees room to rewrite their rulebooks without forfeiting safe-harbor eligibility.

Who benefits?

Issuers of exchange-traded products holding a single proof-of-stake asset gain the clearest path forward. Defined compliance could push staking from a legal gray area toward a standard feature of these vehicles.

The guidance does not extend to multi-token baskets, and it does not override the SEC's product-by-product review. Trusts that missed the amendment window, or that cannot meet all 14 conditions, sit outside the protection. For them, staking still carries the classification risk the guidance was designed to resolve.

What's the regulatory dependency?

The safe harbor assumes continued cooperation between the IRS and the SEC. Tax treatment hinges on securities regulators signing off on liquidity policies. If coordination narrows, the compliance path narrows with it.

The procedure's next test will be the first round of filings by trusts that amended their documents during the nine-month window, which will surface whether the property-conservation framing holds up under audit. Until then, the safe harbor functions as a structural shift rather than a settled answer.