According to Cointelegraph, the UK Treasury has revised a law to clarify that crypto staking, essential for proof-of-stake blockchains like Ethereum and Solana, is not classified as a "collective investment scheme." This type of scheme is typically subject to stringent regulations. The amendment, issued on January 8, modifies a section of The Financial Services and Markets Act 2000 concerning group investments. It specifies that "arrangements for qualifying cryptoasset staking do not amount to a collective investment scheme." The term "qualifying cryptoasset staking" refers to the process of validating transactions on a blockchain or similar distributed ledger technology network.
The updated regulation is set to take effect on January 31. This change is seen as a positive development, as collective investment schemes in the UK are heavily regulated by the Financial Conduct Authority. These schemes require registration, authorization, and ongoing compliance by agency-approved managers. Bill Hughes, a lawyer and global regulatory matters director at Consensys, expressed approval of the amendment, stating that blockchain operations should not be treated as investment schemes but rather as cybersecurity measures.
Staking involves blockchain users, such as those on Ethereum and Solana, locking up their native tokens to validate transactions on the network, with the incentive of earning additional tokens. The Treasury's order aligns with its earlier promise to draft a comprehensive crypto regulatory framework by early 2025. Economic Secretary to the Treasury Tulip Siddiq had previously indicated that the regulations would encompass staking services, stablecoins, and the broader crypto sector. The local crypto industry had advocated for staking not to be categorized as a collective investment scheme due to the regulatory implications. Siddiq agreed with this perspective, stating that it was not logical for staking services to be treated in this manner and that the government intends to eliminate this legal ambiguity.
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