Tax insight

IRS addresses the tax status of trusts staking digital assets

Insight
5 minute read
November 13, 2025

What happened?

Rev. Proc. 2025-31, issued by the IRS on November 10, establishes a safe harbor framework for certain trusts classified as an investment trust and as a grantor trust that wish to engage in digital asset staking without jeopardizing their tax classification under federal law. The guidance responds to industry requests for clarity on whether participation in staking activities—particularly those involving proof-of-stake networks—constitutes a disqualifying “power to vary” investments or converts the trust into a business entity for tax purposes.

Why is it relevant?

Rev. Proc. 2025-31 represents a significant milestone in the federal government’s effort to harmonize digital asset taxation, securities regulation, and fiduciary trust law. By providing a well-defined safe harbor, the IRS facilitates broader institutional participation in proof-of-stake networks through regulated trusts while preserving longstanding tax classifications.

It also reflects coordination between the IRS and the SEC’s recent guidance (see our recent PwC Tax Insight for details) so that tax treatment aligns with investor-protection and market-liquidity standards. For fiduciaries, sponsors, and institutional investors, this guidance provides a clear compliance roadmap for staking activities within a trust structure without risking reclassification as a business entity.

Actions to consider

Trusts can amend their trust agreements within a nine-month period beginning November 10, 2025, to authorize staking without losing their investment or grantor trust status, as long as they satisfy the safe harbor criteria. The procedure applies to tax years ending on or after November 10, 2025.