The UK Treasury has recently amended a law clarifying that cryptocurrency staking is not classified under the definition of 'collective investment schemes', which are typically subject to heavy regulation. The industry views this move as a crucial step to providing legal clarity for proof-of-stake blockchains like Ethereum and Solana.
The UK Treasury issued an order on January 8 to amend parts of the (2000 Financial Services and Markets Act) regarding collective investment, stating that 'eligible cryptocurrency asset staking arrangements do not constitute collective investment schemes (CIS).'
This amendment clarifies that 'compliant cryptocurrency staking' involves activities for transaction verification on a blockchain, distributed ledger technology, or other similar technologies.
The amended law will take effect on January 31.
Consensys lawyer and global regulatory affairs director Bill Hughes posted on social media platform X on January 9:
This is an exciting development because the management and promotion of collective investment schemes are strictly regulated. The way blockchain operates is not an investment scheme; at its core, it is a network security mechanism.
Good news frens. It looks like that, by the end of the month, proof of stake mechanisms underlying certain blockchains (e.g. #Ethereum #Solana) will not be considered collective investment schemes under UK law. This is a good development because the management and promotion of… pic.twitter.com/JJgEO5rmPP
— Bill Hughes : wchughes.eth (@BillHughesDC) January 9, 2025
In the UK, 'collective investment schemes' refer to a method that allows participants to obtain profits or income, which can include ETFs and investment funds.
These types of collective investment schemes are heavily regulated by the UK's Financial Conduct Authority (FCA), requiring registered and authorized managers to obtain institutional approval and continually commit to compliance.
In the cryptocurrency field, staking is a process that allows users of blockchains like Ethereum and Solana to lock up their native tokens and use them to verify on-chain transactions, thus earning additional tokens as rewards.
The UK Treasury will issue this order, clearly fulfilling a commitment made last November, when a draft cryptocurrency regulatory framework was expected to be completed by early 2025.
UK Treasury Economic Secretary Tulip Siddiq stated at a conference in London last November that these regulatory provisions will cover staking services, stablecoins, and cryptocurrencies.
The UK cryptocurrency industry has pushed for staking not to be designated as collective investment, arguing that the regulatory approach should be different. Tulip Siddiq agrees with this point. She said:
It is unreasonable to treat staking services this way. The government plans to correspondingly promote the removal of this legal uncertainty.
"Breaking! UK Legislation Clarifies: Cryptocurrency Staking is Not Subject to Collective Investment Scheme Legal Regulation" This article was first published on (BlockTempo).
