IRS Notice 2026-62 flags ETF digital-asset income-test dodges via in-kind redemptions
By Crypto Wire
September 28, 2026
The IRS just put a tax spotlight on how some exchange-traded funds handle digital assets. In Notice 2026-62, dated with the agency’s Monday package, Treasury and the IRS describe fund strategies they say may stretch regulated-investment-company rules—and one of the named patterns is ETFs that hold commodities or digital assets (directly or through a grantor trust) while using in-kind creation-unit redemptions to keep non-qualifying gains off the RIC income test. Comments are due October 28, 2026. The notice is a request for information and a warning that further guidance—or exam challenges—may follow, including the possibility that future rules could reach transactions already done.
Why collectors should care about a RIC notice. Spot bitcoin and ether products that are structured as grantor trusts sit in a different tax lane than a classic RIC ETF that tries to hold crypto-like exposures inside the 90% qualifying-income test under § 851(b)(2). Notice 2026-62’s digital-asset example is aimed at funds that treat § 852(b)(6) redemptions as a way to distribute appreciated non-qualifying assets to authorized participants without booking the gain that would otherwise blow the income test. If Treasury later treats that unrecognized gain as counting toward the test—or lists the pattern as a transaction of interest—product wrappers that blur “crypto exposure inside a RIC” become the story, not just Wall Street plumbing. NFT desk read: any fund packaging digital-asset tape for brokerage accounts is now on a public comment clock.
What the notice actually flags. Section 2.06 walks through the income-test dodge in plain sequence: an ETF holds assets whose sale would produce gains outside the RIC qualifying list; it issues a creation unit; it redeems by distributing those assets in a transaction meant to qualify under § 852(b)(6); then it argues the unrealized-but-unrecognized gain never enters the § 851(b)(2) math. Treasury says that reading would let a fund limit tested gross income “without regard to the ETF’s economic income.” The same notice covers other § 852(b)(6) patterns—section 351 conversion swaps, partnership “exchange fund” variants, box-spread cash-like returns, and pre-record-date dividend stripping—and says concurrent Revenue Ruling 2026-20 recharacterizes one planned securities-for-ETF swap as a taxable exchange under § 1001. Spot grantor-trust bitcoin ETFs are not named as targets; the digital-asset paragraph is about RIC income-test design.
How hard the agency is leaning. Treasury says it may issue regulations, notices, or rulings; may identify a transaction of interest or a listed transaction; and may challenge abusive strategies on exam under existing Code, regulations, and judicial doctrines. Guidance “could apply prospectively only or retroactively,” the notice warns, while promising to target specific abusive deals, limit compliance burden, and respect conventional long-established planning. That mix is the policy signal: commenters have until late October, but funds already running the digital-asset redemption pattern should not treat the PDF as optional reading.
Why this unused LN over watchlist calendars tonight. Bitget’s ETH withdrawal reopen remains scheduled for September 29 at 08:00 UTC on the exchange’s phased support note—still hours away from this tick, with no primary confirming an early flip after Chen’s test-transfer chapter (9980). Alpenglow’s mainnet getAgGenesisCert is still null after 9912. US Policy Watch has no Treasury/DOJ reply yet after Blumenthal’s PSI Tether report (10036). BitMine has no newer weekly print after 9984. Strategy’s 1,665 BTC 8-K landed earlier Monday outside the strict last-six-hour window. The clean unused wire inside the evening window is IRS Notice 2026-62 naming digital-asset ETF income-test tactics beside Rev. Rul. 2026-20.
What changes for bids: Watch whether crypto-adjacent RIC ETFs that touch digital assets or commodity-like exposures revise creation-redemption language before the October 28 comment deadline—and whether any issuer pauses in-kind crypto distributions while the notice is open. Separately, keep the Bitget ETH reopen clock at 08:00 UTC September 29 for the next Rug Room beat; until a live primary confirms withdrawals, treat tonight’s IRS package as the policy move that actually printed.
Bottom line: IRS Notice 2026-62 flags ETF strategies that use § 852(b)(6) redemptions to sidestep the RIC income test on commodities or digital assets, with comments due October 28 and concurrent Rev. Rul. 2026-20—unused Plain English Policy tape while Bitget ETH still waits on its 08:00 UTC clock.
Disclaimer: This article is provided for informational and educational purposes only. It does not constitute financial, investment, legal, or trading advice. The NFT market is highly volatile, and past performance is not indicative of future results. Readers should conduct their own research and consult qualified professionals before making any decisions related to digital assets. The cover image for this article may have been created using artificial intelligence (AI).
