Treasury Secretary Scott Bessent recently announced that the Treasury Department and the Internal Revenue Service (IRS) have provided a clear legal path for exchange-traded funds (ETFs) and trusts to stake crypto assets and share rewards with investors.
New crypto staking provisions
Bill Hughes, a market expert and attorney from the blockchain software company ConsenSys, explained that trusts, under new provisions announced by Minister Bessent, can deploy digital assets on permissionless proof-of-stake (PoS) networks if they meet specific criteria.
These requirements include holding only one type of crypto asset along with cash, using a qualified custodian to hold the keys and conduct the staking process, and maintaining a Securities and Exchange Commission (SEC)-approved liquidity policy. This ensures that repayments can be made even if assets have been deployed.
In addition, trusts must enter arms-length arrangements with independent staking providers and limit their activities solely to holding, staking and redemptions of assets, avoiding discretionary trading.
Hughes believes the implications for strike acceptance are significant. This provides much-needed regulatory and tax clarity for institutional investment vehicles, including crypto ETFs and trusts. It allows these entities to participate in strike action while remaining compliant with existing laws.
By effectively removing a significant legal hurdle that has previously prevented fund sponsors, custodians and asset managers from integrating strike returns into regulated investment products, the new framework opens the door to wider participation.
Greater deployment participation is expected
As a result of these developments, the expert claimed that more regulated entities are likely to engage in staking on behalf of investors, which could lead to greater staking participation, greater liquidity and greater network decentralization.
Notably, this new framework aligns tax treatment with evolving SEC disclosure requirements and stock market liquidity standards, reinforcing staking as a legitimate and conservative strategy for generating returns within U.S. financial products.
Featured image of DALL-E, chart from TradingView.com
Editing process for bitcoinist is focused on providing thoroughly researched, accurate, and unbiased content. We have strict sourcing standards and every page is carefully reviewed by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance and value of our content to our readers.
#Crypto #Staking #Approved #ETFs #Trusts #Key #Details #Bitcoinist.com