U.S. Treasury Greenlights Staking for Crypto ETFs

The U.S. Treasury's recent regulatory update has redefined the landscape of passive crypto investing. By officially allowing crypto ETFs to stake digital assets and distribute staking rewards to retail investors, the Treasury-alongside the IRS-has established a framework that bridges the gap between traditional finance and blockchain innovation, according to a Blockonomi analysis. This move, announced in 2025, marks a pivotal shift in how investors access yield-generating opportunities in the crypto market. Treasury Secretary Scott Bessent emphasized that the guidance creates a "clear path" for crypto ETFs to engage in staking, a development he described as critical for enhancing investor returns and fostering innovation in digital assets, according to the Blockonomi analysis. Legal experts, including Greg Xethalis of Multicoin Capital, have hailed the update as a "safe harbor" that resolves structural complexities and ensures tax transparency for these investment vehicles, according to the Blockonomi analysis.

A New Era for Staking-Enabled ETFs

The market has already begun to respond to this regulatory clarity. The launch of the Bitwise Solana Staking ETF (BSOL) in 2025 exemplifies the growing appetite for staking-driven products. On its debut, BSOL recorded $55.4 million in trading volume-the highest for any crypto ETF launch that year-and attracted $223 million in pre-launch assets, underscoring strong institutional and retail confidence in Solana's staking model, according to a Coinotag report. By comparison, other altcoin staking ETFs, such as the Canary Capital Hedera ETF (HBR) and Litecoin ETF (LTCC), saw significantly lower debut volumes of $8 million and $1 million, respectively, according to the Coinotag report. This disparity highlights the varying levels of network adoption and perceived value among different blockchain ecosystems.

The success of BSOL and similar products signals a broader trend: investors are increasingly prioritizing yield generation in their crypto portfolios. Staking-enabled ETFs offer a structured way to participate in blockchain networks while mitigating the operational risks associated with self-custody. For instance, Proof-of-Stake (PoS) networks like Ethereum and Solana provide stable, predictable yields ranging from 3% to 18% as of mid-2025, according to a LBank report. These returns far exceed the typical 0.1%-0.5% yields of traditional cash equivalents, making staking a compelling option for passive income seekers.

Staking vs. Traditional Passive Investments: A Performance Analysis

The emergence of staking-enabled ETFs challenges conventional notions of passive investing. A comparative analysis from 2023 to 2025 reveals that traditional passive funds, evaluated using tracking error metrics, often fail to capture long-term performance trends relevant to buy-and-hold investors, according to the Coinotag report. In contrast, staking ETFs leverage cointegration-based metrics to align with extended investment horizons, offering a more holistic view of returns. Bitwise's research introduces the "Overall Tracking Performance" (OTP) metric, which integrates short- and long-run evaluations to provide a comprehensive benchmark, according to the Coinotag report.

From a risk-return perspective, staking ETFs also outperform alternatives like cloud mining. While cloud mining contracts can offer speculative returns of 100%-800% APR, they are plagued by operational volatility, platform insolvency risks, and environmental concerns tied to energy-intensive Proof-of-Work (PoW) mechanisms, according to the LBank report. Staking, by contrast, operates on energy-efficient PoS networks and benefits from regulatory clarity, making it a more sustainable and secure option for passive income.

The Road Ahead

The U.S. Treasury's endorsement of staking in crypto ETFs is more than a regulatory update-it is a catalyst for a paradigm shift in passive investing. By enabling investors to earn yields through blockchain participation, these products democratize access to innovation-driven returns. As the market matures, the performance of staking ETFs will likely continue to outpace traditional alternatives, particularly as institutional adoption grows and more blockchain networks adopt PoS frameworks.

For investors, the key takeaway is clear: the integration of staking into ETF structures represents a strategic evolution in how capital is allocated in the digital asset space. With regulatory hurdles now addressed, the focus will shift to execution-how effectively fund managers can optimize staking rewards while maintaining transparency and compliance.