The IRS has put crypto ETFs (exchange-traded funds) on notice. A notice issued Monday flags funds holding digital assets that use a trading trick to keep gains off their books.

The same day, the IRS shut down a tax-free stock swap used by wealthy investors. Both moves target the same ETF rule.

How Crypto ETFs Keep Gains Off the Books

Most US funds get a special tax status. They pay no tax themselves, as long as at least 90% of their income comes from dividends, interest, and stock gains.

Profits on crypto and commodities do not count. Too much of that income puts the tax break at risk.

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