IRS Scrutinizes Tax Strategies Used by Crypto ETFs

The IRS and the Treasury Department are investigating tax strategies used by crypto-linked ETFs, signaling a potential crackdown on structures designed to avoid taxable gains. Regulators are concerned that some funds are using in-kind redemption mechanisms to bypass the 90% gross income test required for regulated investment companies. Treasury Secretary Scott Bessent stated that the agencies are committed to preventing transactions that exploit the federal tax code.