The Institutional Guide to Staking: Tax, Lockups, and Counterparty Risk

Staking transforms crypto from a speculative asset into a yield-bearing instrument, but it introduces non-negligible trade-offs. Liquid staking tokens (LSTs) like stETH or rETH solve lockup periods but add de-peg risk and smart contract layers. Native staking through validators eliminates LST risk but ties capital for weeks (Ethereum) or months (Cardano). For tax treatment, many jurisdictions classify staking rewards as income at receipt—track each reward’s basis separately. And never ignore slashing: diversify across multiple reputable validators, not just Lido or Coinbase. Staking is not “set and forget”; it’s active risk management.