rp-26-20.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.105: Examination of returns and claims for refund, credit or abatement;
determination of correct tax liability.
(Also Part I, §§ 671, 677; 301.7701-2, 301.7701-4)

Rev. Proc. 2026-20

SECTION 1. PURPOSE
This revenue procedure describes a safe harbor for trusts that otherwise qualify as
investment trusts under § 301.7701-4(c) and as grantor trusts to stake their digital
assets without jeopardizing their tax status as investment trusts and grantor trusts for
Federal income tax purposes. This revenue procedure also provides a limited time
period for an existing trust to implement the requirements of the safe harbor, including
amending its governing instrument (trust agreement) to authorize staking, revising its
processes and procedures, or a combination of both. This revenue procedure clarifies,
modifies, and supersedes Rev. Proc. 2025-31, 2025-48 I.R.B. 743, to address requests
received by the Department of the Treasury (Treasury Department) and the Internal

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Revenue Service (IRS) for additional guidance on certain aspects of Rev. Proc. 2025-
31.
SECTION 2. BACKGROUND – DIGITAL ASSETS AND STAKING
.01 Digital assets are digital representations of value recorded on a
cryptographically secured distributed ledger or similar technology within the meaning of
section 6045(g)(3)(D) of the Internal Revenue Code (Code) (digital assets).
1
Digital
assets generally are treated as property for Federal income tax purposes and Federal
income tax principles apply to digital asset transactions.
2
This revenue procedure
addresses only digital assets for which transactions are carried out on a permissionless
network that uses a proof-of-stake consensus mechanism to validate those
transactions.
.02 The operation of each digital asset blockchain network is governed by software
that programmatically enforces certain network rules and technical requirements, as
well as distributions of rewards (protocol). For a digital asset transaction to be
recognized by the blockchain network, the transaction must be added to the network’s
decentralized digital ledger (blockchain).
.03 Digital assets rely on cryptography and on economic mechanisms designed to
reduce reliance on designated trusted intermediaries to verify transactions and provide
settlement assurances to users. Each protocol has a consensus mechanism that
enables a distributed set of unrelated computers (commonly referred to as “nodes”) to
agree on the authoritative record of digital asset address ownership balances,

1
Unless otherwise specified, all “section” or “§” references are to sections of the Code, the Income Tax
Regulations (26 CFR Part 1), or the Procedure and Administration Regulations (26 CFR Part 301).
2
See Notice 2014-21, 2014-16 I.R.B. 938.

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transactions, and other data relating to a digital asset’s blockchain at any given time
(state). The consensus mechanism is intended to maintain the integrity of the
blockchain by validating transactions and ensuring transactions added to the blockchain
are valid. This can be done, for example, by rejecting transactions that attempt to move
the same units to two different wallet addresses at the same time (so-called “double
spending”). Preventing such transactions from being recorded on a blockchain is
essential to the security and integrity of a digital asset’s blockchain. Absent such
assurance, users could lose confidence in the digital asset network and the
corresponding digital assets could lose value.
.04 Proof-of-stake is a type of consensus mechanism. In a proof-of-stake
consensus mechanism, the protocol generally uses staked digital assets to determine
eligibility to participate in validating new blocks of data on the blockchain and the extent
of that participation. Staking is the exercise of the validation capabilities associated with
digital assets under a relevant protocol’s rules by committing those digital assets to
support the protocol’s validation process, thereby making a validator node eligible to be
selected by the protocol to participate in that process. Generally, digital asset owners
can stake directly or can delegate their staking power to a validator node without
transferring ownership of the digital assets. A validator node is a type of node that
participates in the consensus mechanism, in addition to performing ordinary node
functions, such as maintaining and verifying blockchain data. A validator node operator
is the person or entity that operates, controls, or maintains a validator node. The
amount staked generally affects a validator node operator’s eligibility to participate in
block validation, the validator node operator’s participation in the consensus process,

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and the extent of that participation. Depending on the protocol, staked digital assets
may be subject to protocol-defined transfer restrictions, such as a lockup or cooldown
period.
.05 For the validation process to support the security and integrity of a digital asset’s
blockchain, voting power must be sufficiently distributed such that no single validator
node operator, or coordinated group of validator node operators, controls, is delegated,
or is otherwise attributed a sufficient portion of the total staked digital assets to
compromise the protocol’s consensus process under its governing rules. If a validator
node operator or group of validator node operators were to control such an amount of
voting power, it could influence the validation of transactions and undermine the
reliability of the blockchain. Accordingly, an increase in the amount of digital assets
staked and a broader distribution of staked digital assets across independently operated
validator nodes can enhance the security of blockchains that use proof-of-stake
consensus mechanisms. To incentivize participation in the consensus process, a proof-
of-stake protocol may distribute rewards. These rewards may consist of newly minted
digital assets specified by the protocol, transaction fees paid by parties seeking to add
transactions to the blockchain (collectively, “rewards” or “staking rewards”), or both.
Depending on the protocol and the arrangement, rewards may be distributed to
validator node operators, to digital asset owners whose staked assets are attributed to
those validator node operators, or to both. Rewards generally are received in the form
of a blockchain’s native digital asset. Conversely, if a validator node operator fails to act
in accordance with a blockchain network’s consensus mechanism, some staked units
may be forfeited as a penalty (slashing).

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.06 Digital asset owners can participate in staking in various forms. One such form
is custodial staking, in which a third party (custodian) takes custody of the owner’s
digital assets and facilitates the staking of such digital assets on behalf of the owner.
Generally, a custodian focuses on securely holding, storing, and safeguarding digital
assets on behalf of digital asset owners. The custodian, acting on behalf of the owner,
selects and enters into contractual arrangements with one or more validator node
operators who engage in proof-of-stake activities for digital asset blockchains (staking
provider). In some cases, the legal entity that is the custodian or a related party to the
custodian also may act as the staking provider. The arrangement between the
custodian and the staking provider generally provides that an agreed-on portion of the
staking rewards are allocated to the owner of the digital assets.
.07 Some legal entities formed as trusts under applicable State law that hold digital
assets intend to be treated for Federal income tax purposes as investment trusts under
§ 301.7701-4(c) and as grantor trusts. Certain actions of the trust may be directed by
the trust’s sponsor.
.08 In 2025, the Treasury Department and the IRS received requests for guidance
on: (1) whether staking digital assets prevents a legal entity formed as a trust under
applicable State law from qualifying for Federal income tax purposes as a trust
classified as an investment trust under § 301.7701-4(c) and as a grantor trust; and (2) if
not, whether an existing trust agreement may be amended to authorize the staking of
some or all of its digital assets without impairing qualification of the trust as an
investment trust under § 301.7701-4(c) and as a grantor trust. In response to those
requests, on November 10, 2025, the Treasury Department and the IRS issued Rev.

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Proc. 2025-31, which provided a safe harbor for trusts that otherwise qualify as
investment trusts under § 301.7701-4(c) and as grantor trusts to stake their digital
assets without jeopardizing their tax status as investment trusts and grantor trusts for
Federal income tax purposes and also provided a limited time period for an existing
trust to amend its governing instrument to adopt the requirements of the safe harbor.
.09 Following the issuance of Rev. Proc. 2025-31, the Treasury Department and the
IRS received requests for additional clarity on certain aspects of the revenue procedure,
including: (1) the proof-of-stake protocols covered; (2) the requirement that the SEC
approve trust disclosures; (3) the use of multiple custodians in the staking process; (4)
the extent of slashing protection required; (5) the unstaking and sale of digital assets in
anticipation of distributions; (6) the consistent treatment of staking rewards; (7) whether
transactions treated by the trust as borrowing digital assets qualify as contingent
liquidity arrangements; and (8) the scope of the safe harbor and the application of the 9-
month grace period for implementing the safe harbor’s requirements for trusts that
already authorized staking. In response to those requests, the Treasury Department
and the IRS are clarifying, modifying, and superseding Rev. Proc. 2025-31 as provided
in this revenue procedure.
SECTION 3. BACKGROUND - TRUSTS
.01 Section 301.7701-2(a) defines a “business entity” as an entity recognized for
Federal tax purposes (including an entity with a single owner that may be disregarded
as an entity separate from its owner under § 301.7701-3) that is not properly classified
as a trust under § 301.7701-4 or otherwise subject to special treatment under the Code.

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.02 Section 301.7701-4(a) provides generally that an arrangement is treated as a
trust if the purpose of the arrangement is to vest in trustees the responsibility to protect
or conserve property for beneficiaries who cannot share in the discharge of this
responsibility and, therefore, are not associates in a joint enterprise for the conduct of
business for profit.
.03 Section 301.7701-4(b) provides that there are other arrangements known as
trusts because the legal title to property is conveyed to trustees for the benefit of
beneficiaries, but that are not classified as trusts for Federal tax purposes because they
are not simply arrangements to protect or conserve the property for the beneficiaries.
These trusts, which are often known as business or commercial trusts, generally are
created by the beneficiaries simply as a device to carry on a profit-making business that
normally would have been carried on through a business organization classified as a
corporation or partnership.
.04 Section 301.7701-4(c) provides that an “investment” trust is not classified as a
trust if there is a power under the trust agreement to vary the investment of the
certificate holders. An investment trust with a single class of ownership interests,
representing undivided beneficial interests in the assets of the trust, is classified as a
trust if there is no power under the trust agreement to vary the investments of the
certificate holders.
.05 A power to vary the investment of the certificate holders exists where there is a
managerial power under the trust instrument that enables a trust to take advantage of
variations in the market to improve the investments of the certificate holders. See

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Comm’r v. North American Bond Trust, 122 F.2d 545 (2d Cir. 1941), cert. denied, 314
U.S. 701 (1942).
.06 Rev. Rul. 75-192, 1975-1 C.B. 384, discusses the situation where a provision in
the trust agreement requires the trustee to invest cash on hand between quarterly
distribution dates. The trustee is required to invest the money in short-term obligations
of (or guaranteed by) the United States, or any agency or instrumentality thereof, and in
certificates of deposit of any bank or trust company having a minimum stated surplus
and capital. The trustee is permitted to invest only in obligations maturing before the
next distribution date and is required to hold such obligations until maturity. Rev. Rul.
75-192 concludes that, because the restrictions on the types of permitted investments
limit the trustee to a fixed return like that earned on a bank account and eliminate any
opportunity to profit from market fluctuations, the power to invest in the specified kinds
of short-term investments is not a power to vary the trust’s investment.
.07 Rev. Rul. 78-371, 1978-2 C.B. 344, concludes that a trust established by the
heirs of a number of contiguous parcels of real estate is an association taxable as a
corporation for Federal income tax purposes where the trustees have the power to
purchase and sell contiguous or adjacent real estate, accept or retain contributions of
contiguous or adjacent real estate, raze or erect any building or structure, make any
improvements to the land originally contributed, borrow money, and mortgage or lease
the property.
.08 Rev. Rul. 79-77, 1979-1 C.B. 448, concludes that a trust formed by three parties
to hold a single parcel of real estate is classified as a trust for Federal income tax
purposes when the trustee was authorized to sign a long-term net lease for the property,

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with options to renew the lease with recomputed rent; to hold title to the land and
building and to proceeds and income of the property; to distribute all trust income and
otherwise to protect or conserve the property. See Wyman Building Trust v.
Commissioner, 45 B.T.A. 155 (1941), acq., 1941-2 C.B. 14 (trust not treated as an
association taxable as a corporation where trust held a single property, the trustee
executed and extended net leases to the same tenant at the same rental, and collected
and distributed the rents).
.09 Rev. Rul. 81-238, 1981-2 C.B. 248, establishes that an automatic reinvestment
plan in which trust interest holders elect to use distributions to purchase interests in new
fixed investment trusts does not constitute a power to vary. The plan does not involve
reinvestment in the original trust and there is no change in, or addition to, the assets of
the original trust.
.10 Rev. Rul. 90-63, 1990-2 C.B. 270, holds that the power to consent to changes in
the credit support for debt obligations held in an investment trust is not a “power to vary
the investment” within the meaning of § 301.7701-4(c) if that power is exercisable only
to the extent that the trustee reasonably believes the change is advisable to maintain
the value of trust property by preserving the credit rating of the bonds.
.11 Rev. Rul. 2004-86, 2004-2 C.B. 191, concludes that a Delaware statutory trust is
classified as an investment trust where the trust holds a single property subject to a
mortgage and net lease, the trustee is permitted to renegotiate the lease or enter into
leases with other tenants in the event of the tenant’s bankruptcy or insolvency, and
otherwise has very limited powers.

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.12 Section 671 provides that, where the grantor or another person is treated as the
owner of any portion of a trust (commonly referred to as a “grantor trust”), there shall be
included in computing the taxable income and credits of the grantor or the other person
those items of income, deductions, and credits against tax of the trust which are
attributable to that portion of the trust to the extent that the items would be taken into
account under chapter 1 of the Code in computing taxable income or credits against the
tax of an individual.
.13 Section 677(a) provides that the grantor is treated as the owner of any portion of
a trust whose income without the approval or consent of any adverse party is, or, in the
discretion of the grantor or a nonadverse party, or both, may be distributed, or held or
accumulated for future distribution, to the grantor or the grantor’s spouse.
.14 A person that is treated as the owner of an undivided fractional interest in a trust
under subpart E of part I, subchapter J of chapter 1 of the Code (sections 671 and
following), is considered to own the trust assets attributable to that undivided fractional
interest of the trust for Federal income tax purposes. See Rev. Rul. 88-103, 1988-2
C.B. 304; and Rev. Rul. 85-13, 1985-1 C.B. 184; see also § 1.1001-2(c), Example 5.
SECTION 4. BACKGROUND – APPLICABLE REGULATORY RULES
.01 SEC Rules. The offer and sale of interests in a trust holding digital assets to
investors in a public offering is subject to registration with the U.S. Securities and
Exchange Commission (SEC). The regulations and rules of the SEC address, among
other matters, the public disclosure by the trust of its activities, including with respect to
staking. Accordingly, before trust interests are offered to investors, the trust’s public
disclosure is filed with the SEC, and interests are not sold until the registration

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statement is effective. The trust’s disclosure is subject to the SEC’s continued oversight
and jurisdiction. SEC rules may require an issuer to provide additional disclosure to
investors when material facts relating to its offering change.
.02 SEC Statement and Orders Relating to Staking. On May 29, 2025, the SEC
Division of Corporation Finance issued a Statement on Certain Protocol Staking
Activities.
3
The Statement addresses certain activities known as “staking” on digital
asset networks that use proof-of-stake as a consensus mechanism. On July 29, 2025,
the SEC approved In-Kind Creations and Redemptions for Crypto ETPs.
4
On
September 17, 2025, the SEC approved rule changes proposed by three national
securities exchanges to adopt generic listing standards for exchange-traded products
that hold commodities, which as defined in the SEC order include certain digital assets.
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.03 Exchange Rules. Interests in trusts holding digital assets may be listed and
traded on a national securities exchange that is a self-regulatory organization. The
rules of the national securities exchange, approved by the SEC, prescribe conditions
that must be satisfied in order for shares (including trust interests) to be listed. Under
those rules, certain trust interest holders are issued interests in the trust in a specified
aggregate minimum number in return for a deposit of a quantity of the underlying digital
asset and/or cash; and when aggregated in the same specified minimum number, the
trust interests may be redeemed at such holder’s request by the trust, which will deliver
to the redeeming holder the quantity of the underlying digital asset and/or cash.

3
SEC, Statement on Certain Protocol Staking Activities (May 29, 2025),
https://www.sec.gov/newsroom/speeches-statements/statement-certain-protocol-staking-activities-
052925.
4
SEC Release No. 34-103571, 90 FR 36248 (Aug. 1, 2025); SEC, SEC Permits In-Kind Creations and
Redemptions for Crypto ETPs (July 29, 2025), https://www.sec.gov/newsroom/press-releases/2025-101-
sec-permits-kind-creations-redemptions-crypto-etps. An ETP is an exchange-traded product.
5
SEC Release No. 34-103995, 90 FR 45414 (Sept. 22, 2025).

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.04 Liquidity Policies and Procedures. The generic listing standards of the national
securities exchange where interests in a trust are listed and traded require that the trust
have in place liquidity risk policies and procedures to ensure that the trust can redeem
trust interests at a trust interest holder’s request.
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Pursuant to these generic listing
standards, if a trust has on a daily basis less than 85 percent of its assets readily
available to meet redemption requests, the trust must have and disclose written liquidity
risk policies and procedures reasonably designed to address the risk that it could not
meet requests to redeem interests issued by the trust without significant dilution of the
remaining holders’ interests in the trust. For this purpose, an asset is deemed not
readily available to meet redemption requests if it is segregated, pledged, hypothecated,
encumbered, or otherwise restricted or prevented from being liquidated, sold,
transferred, or assigned within one business day. These policies and procedures must
be periodically reviewed, no less frequently than annually. The exchange’s disclosure
requirements regarding liquidity risk are intended to cover situations such as staking by
the trust of its digital assets, particularly if the staked amount exceeds 15 percent of the
trust’s assets on any given day and such staked assets are not readily available for
redemption requests within one business day. The generic listing standards require that
the trust’s liquidity risk policies and procedures be prominently displayed on the trust’s
website.
SECTION 5. SCOPE
An arrangement formed as a trust under applicable State law that qualifies as an
investment trust under § 301.7701-4(c), and as a grantor trust for Federal income tax

6
See SEC Release No. 34-103972, 90 FR 45075 (Sept. 18, 2025); SEC Release No. 34-103974, 90 FR
45082 (Sept. 18, 2025); SEC Release No. 34-103973, 90 FR 45089 (Sept. 18, 2025).

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purposes, as determined immediately before satisfying all the requirements in section
6.02 of this revenue procedure, may apply the safe harbor described in section 6 of this
revenue procedure.
SECTION 6. SAFE HARBOR
.01 Safe Harbor. Provided all the requirements in section 6.02 of this revenue
procedure are satisfied, with respect to a trust described in Section 5 of this revenue
procedure, the trustee’s authorization, pursuant to its trust agreement, to stake the
trust’s digital assets and the resulting staking of the trust’s digital assets do not prevent
the trust from qualifying for Federal income tax purposes as a trust classified as an
investment trust under § 301.7701-4(c) and as a grantor trust. References in section 6
of this revenue procedure to actions taken by the trust or the trustee also include
actions directed by the sponsor of the trust pursuant to the trust agreement. The
provisions of section 6.02 of this revenue procedure apply equally to all staking rewards,
whether consisting of additional units of newly minted digital assets or transaction fees
paid by parties seeking to add transactions to the blockchain, and regardless of whether
such rewards are staked or unstaked.
.02 Requirements.
(1) Interests in the trust are traded on a national securities exchange. The trust’s
activities comply with the rules of the national securities exchange on which the trust
interests are listed and traded. The trust’s disclosure regarding the staking of its digital
assets has been filed with the SEC in an effective registration statement and is subject
to the SEC’s continued oversight and jurisdiction. The trust’s assets and activities are
described in the May 29, 2025, Statement on Certain Protocol Staking Activities of the

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SEC’s Division of Corporation Finance. The trust has written liquidity risk policies and
procedures that comply with the rules of the national securities exchange on which the
trust interests are listed and traded.
(2) The trust owns only cash and units of a single type of digital asset (as defined
by section 6045(g)(3)(D)), transactions for which are carried out on a permissionless
network that uses a proof-of-stake consensus mechanism to validate those
transactions.
(3) The trust’s digital assets are held by one or more custodians, acting on behalf
of the trust, at digital asset addresses controlled by the custodian(s). Only the
custodian can access the private keys associated with the digital asset addresses for
the digital assets that custodian holds. Accordingly, only the custodian can effect a sale,
transfer, or exercise the rights of ownership over the trust’s digital assets held by that
custodian, including while those assets are staked. For Federal income tax purposes,
the trust retains ownership of the digital assets at all times, including while they are
staked.
(4) The trust’s staking of its digital assets protects and conserves trust property by
mitigating the risk that another party or group could control a majority of the total staked
digital assets of that type and engage in transactions that could reduce the value of the
trust’s digital assets.
(5) The trustee’s activities relating to digital assets are limited to: (i) accepting
deposits of the digital asset or cash in exchange for newly issued interests in the trust;
(ii) holding the digital assets and cash; (iii) paying trust expenses and selling digital
assets for cash to pay trust expenses, make cash distributions, or make cash

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redemptions of trust interests; (iv) purchasing additional digital assets with cash
contributed to the trust; (v) distributing digital assets or cash to trust interest holders,
whether or not in redemption of their interests in the trust; (vi) selling digital assets for
cash in connection with the trust’s liquidation; and (vii) directing the staking of its digital
assets in a manner consistent with the applicable requirements of both the national
securities exchange on which the trust interests are listed and traded and section 6.02
of this revenue procedure, including providing for a liquidity reserve to the extent
provided in section 6.02(9) of this revenue procedure and entering into a contingent
liquidity arrangement to the extent provided in section 6.02(12) of this revenue
procedure. Pursuant to the trust agreement, the trustee is prohibited from seeking to
take advantage of variations in the market to improve the investments of trust interest
holders, including variations based on the value of the digital assets or the amount of
staking rewards.
(6) The trustee directs the staking of its digital assets through one or more
custodians who facilitate the staking of the digital assets on the trust’s behalf with one or
more staking providers. The trust and the sponsor are unrelated to the staking provider.
The trustee, sponsor, or custodian holding the digital assets performs all appropriate
due diligence as to the selection of each staking provider with regard to those digital
assets and negotiates, on behalf of the trust, the provisions of the contract with the
staking provider. The staking provider regularly enters into arrangements with unrelated
persons involving similar activities, and such other persons are also unrelated to the
trust, the custodian holding the digital assets, and the sponsor. The staking provider
bears its own expenses. The allocation of staking rewards between the staking provider

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and the custodian on behalf of the trust is an arm’s length allocation that is independent
of the expenses of the staking provider or custodian, and may be stated as a
percentage of the staking rewards derived from staking the trust’s digital assets. The
other terms and conditions of each custodian’s arrangements with the staking provider
reflect arm’s length terms.
(7) The trust, a custodian in its capacity as such, and the sponsor have no legal
right or arrangement to participate in or direct or control the activities of the staking
provider in any way, and do not do so, except to direct the staking and unstaking of the
trust’s digital assets as provided in section 6.02 of this revenue procedure.
(8) All of the digital assets of the trust are made available to one or more staking
providers to be staked at all times, except as provided in sections 6.02(9), (10), (11),
and (12) of this revenue procedure.
(9) When appropriate in the trustee’s or sponsor’s reasonable judgment to comply
with the trust’s liquidity risk policies and procedures required by the national securities
exchange on which the interests in the trust are listed and traded, a trust may stake less
than all its digital assets to create and maintain a liquidity reserve. The trust’s liquidity
risk policies and procedures must be based solely on factors relating to the requirement
of the national securities exchange that assets be readily available to meet redemption
requests within the required period. The trustee may increase or decrease the trust’s
liquidity reserve in compliance with the trust’s liquidity risk policies and procedures,
provided that, to the extent the liquidity reserve is reduced, the trustee shall resume
making the digital assets not subject to the liquidity reserve available for staking as soon
as and to the extent reasonably possible. On the occurrence of one or more of the

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events described in section 6.02(10) and (11) of this revenue procedure, the trustee
shall direct the staking or unstaking of a necessary number of its digital assets to satisfy
the trust’s liquidity reserve as soon as and to the extent reasonably possible.
(10) In addition to holding in a liquidity reserve (as described in section 6.02(9) of
this revenue procedure), if any, digital assets that are not staked, the trust also may, on
a short-term temporary basis and in connection with one or more of the following
events, hold additional digital assets that are not staked, provided that the trustee shall
make such digital assets available for staking (subject to section 6.02(9) of this revenue
procedure, if applicable) as soon as and to the extent reasonably possible:
(i) the sale of digital assets for cash as provided in section 6.02(5)(iii) of this
revenue procedure;
(ii) the contribution of digital assets in connection with the creation of interests in
the trust or distributions of digital assets to trust interest holders;
(iii) the purchase of digital assets in connection with the creation of trust
interests for cash; or
(iv) the ownership of additional digital assets received as, or available for
receipt, as staking rewards.
(11) In addition to holding in a liquidity reserve (as described in section 6.02(9) of
this revenue procedure), if any, digital assets that are not staked, the trust also may, in
connection with one or more of the following events, hold additional digital assets that
are not staked, provided that the trust shall make such digital assets available for
staking (subject to section 6.02(9) of this revenue procedure, if applicable) as soon as
and to the extent reasonably possible:

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(i) obtaining or disposing of digital assets through the contingent liquidity
arrangement described in section 6.02(12) of this revenue procedure pursuant to
applicable law or regulatory rules;
(ii) the sale of digital assets for cash in connection with the trust’s liquidation;
(iii) the need to take protective measures against potential systemic
vulnerabilities in the network’s protocol, the staking smart contracts, or the validator
node operator client software;
(iv) the cessation of the arrangement between the trust and a custodian, but only
with respect to the digital assets affected by the cessation;
(v) the cessation of the arrangement between a custodian and a staking
provider, but only with respect to the staked digital assets affected by the cessation; or
(vi) a change in applicable law or regulation.
(12) When appropriate in the trustee’s or sponsor’s reasonable judgment to
comply with the trust’s liquidity risk policies and procedures required by the national
securities exchange on which the interests in the trust are listed and traded, the trust
may enter into a contingent liquidity arrangement intended to mitigate an adverse
liquidity event that otherwise would prevent the trust from distributing digital assets or
cash to trust interest holders in redemption of their interests in the trust, provided that
the digital assets or cash obtained through the contingent liquidity arrangement are
expected to be distributed, or included in a pool of assets expected to be distributed, in
the near future. For purposes of the foregoing sentence, a contingent liquidity
arrangement is (a) a lending facility or other arrangement permitting the trust to borrow
cash or (b) an arrangement to sell or purchase digital assets for cash or digital assets

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on a current or deferred basis. A contingent liquidity arrangement does not include an
arrangement pursuant to which a trust obtains digital assets in a transaction that the
trust treats as a borrowing of those digital assets for Federal income tax purposes.
(13) To protect or conserve the trust’s property, the trust is indemnified, in a
manner consistent with the proper discharge of the trustee’s fiduciary obligations,
against slashing due to activities or events reasonably within the staking provider’s
control or ability to protect against.
(14) The only new assets received by the trust as a result of staking its digital
assets are additional units, in the same form, of the single type of digital asset held by
the trust. Units of digital assets equal in number to the trust’s staking rewards, net of
trust expenses, are, in proportion to the trust interest holders’ relative interests in the
trust, distributed in kind to trust interest holders, sold for cash and the proceeds
distributed to trust interest holders, or a combination of both. The distributions are
made no more than 60 days after the end of the calendar quarter in which the trust
gains dominion and control over the relevant staking rewards. The cash amount of a
distribution to be made with respect to staking rewards is determined at the time that
units equal in number to the staking rewards are sold for distribution purposes.
.03 Amendment and Reliance. If a trust described in section 5 of this revenue
procedure acts at any time within six months after October 6, 2026, to implement the
requirements set forth in section 6.02 of this revenue procedure, including amending its
trust agreement to authorize staking, revising its processes and procedures, or a
combination of both, those actions will not prevent the trust from being treated as a trust
that qualifies as an investment trust under § 301.7701-4(c) or as a grantor trust. A trust

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that has complied with, and remains compliant with, the requirements of the safe harbor
in Rev. Proc. 2025-31, or with those requirements as clarified and modified by this
revenue procedure, may continue to rely on that safe harbor for up to six months after
October 6, 2026. Following the six-month period after October 6, 2026, no trust may
rely on the safe harbor in Rev. Proc. 2025-31.
SECTION 7. NO INFERENCES ON LAW
.01 No inferences should be drawn about whether similar consequences would
result if actions taken by or on behalf of a trust fall outside the limited scope of this
revenue procedure.
.02 No inferences should be drawn as to any Federal income tax consequences not
expressly addressed in this revenue procedure, including with respect to whether
income attributable to staking would be treated as income effectively connected with the
conduct of a trade or business within the United States or as unrelated business taxable
income. No inferences should be drawn regarding the Federal income tax treatment of
other transactions involving digital assets not expressly addressed in this revenue
procedure, including with respect to forks and airdrops.
SECTION 8. EFFECTIVE DATE
This revenue procedure is effective for tax years ending on or after October 6, 2026.
SECTION 9. EFFECT ON OTHER DOCUMENTS
This revenue procedure clarifies, modifies, and supersedes Rev. Proc. 2025-31.
SECTION 10. DRAFTING INFORMATION
The principal author of this revenue procedure is Andrew B. Christopherson of the
Office of Associate Chief Counsel (Passthroughs, Trusts, and Estates). For further

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information, contact Andrew B. Christopherson at (202) 317-6575 (not a toll-free
number).