The UK Treasury has announced a significant amendment to its legal framework, clarifying that crypto staking does not fall under the definition of a “collective investment scheme” (CIS). This change is particularly relevant for proof-of-stake blockchains like Ethereum and Solana , which rely on staking as part of their consensus mechanisms. The update, published in an order on January 8, revises a section of The Financial Services and Markets Act 2000, indicating that arrangements for qualifying cryptoasset staking are excluded from CIS classification.
The Treasury defines “qualifying cryptoasset staking” as the process of validating transactions on a blockchain or a similar distributed ledger technology. This legal modification will take effect on January 31, allowing participants in the staking process to operate with more clarity regarding regulations. The reshaping of this legislative landscape is viewed positively by industry stakeholders, who have long argued that staking should not be categorized as an investment scheme due to its nature.
In the UK, collective investment schemes encompass any arrangements that provide profits or income to participants, including exchange-traded funds (ETFs) and various investment funds. Such schemes are subject to strict oversight by the Financial Conduct Authority, requiring registration, authorization, and ongoing compliance from approved managers.
Staking facilitates users of a blockchain to lock up native tokens, thereby enabling transaction validation while potentially earning additional tokens as rewards. The recent legal update appears to be part of broader promises made by Treasury officials who indicated that a comprehensive crypto regulatory framework is expected by early 2025. Officials have also suggested that the evolving regulations will encompass staking services and stablecoins, in response to the concerns of the local crypto industry over existing regulations and the need for clarity.
