IRS Revenue Procedure 2025 31 — Safe Harbor for Digital Asset Staking by Investment and Grantor Trusts
IRS Revenue Procedure 2025 31 provides a safe harbor that allows properly structured investment trusts and grantor trusts to participate in digital asset staking without being reclassified as business entities for federal income tax purposes. The procedure treats qualifying staking as property conservation for the benefit of grantors or beneficiaries, not as an active profit seeking enterprise. This preserves grantor level reporting under IRC sections 671 through 677 when the trust limits the assets it holds, relies on independent validators, and does not exercise discretion to vary investments.
Key Tax Impacts
- Establishes an IRS safe harbor for digital asset staking by investment and grantor trusts that already qualify under Reg. § 301.7701 4(c).
- Confirms that passive staking conducted through independent third party validators will not be treated as a power to vary investments.
- Preserves grantor trust pass through treatment so that staking rewards are reported directly by the grantor under IRC sections 671 through 677.
- Prevents reclassification as an association or other business entity under Reg. § 301.7701 2(a) solely due to staking activity.
- Requires that the trust hold only one digital asset type plus cash or cash equivalents.
- Requires that the trustee not have managerial discretion to trade assets or to time validator selection based on market conditions.
- Leaves timing and character of staking income to existing federal tax rules because the procedure addresses classification only.
- Applies to tax years ending on or after November 10, 2025.
For additional digital asset planning issues for fiduciaries, see Digital Asset Taxation for Trusts .
Final Takeaway
Revenue Procedure 2025 31 brings federal tax treatment in line with how many families and institutional fiduciaries are already holding digital assets. A trust that is truly investment oriented, that holds a single digital asset type, and that stakes only through independent validators can earn blockchain rewards without putting its trust classification at risk. This preserves the administrative simplicity of grantor trust reporting and reduces the risk of an unexpected entity level tax result.
Contact Me
If you administer grantor or family trusts that now hold digital assets and you want to confirm that the trust instrument meets the safe harbor conditions, you may contact me to review the language and the staking workflow.
See current federal rates on the Economic Dashboard .
