The UK Treasury has updated its financial laws to confirm that crypto staking does not qualify as a “collective investment scheme” (CIS). The clarification, announced on January 8, is part of an amendment to The Financial Services and Markets Act 2000 and will take effect on January 31.
The order specifies that “qualifying cryptoasset staking” refers to the process of validating transactions on blockchains like Ethereum and Solana or other distributed ledger technologies. This move has been welcomed by the crypto industry, as CIS regulations in the UK are considered stringent and heavily regulated.
Positive Response From Industry Experts
Bill Hughes, a lawyer at Consensys specializing in global regulatory matters, applauded the change. Writing on X (formerly Twitter), Hughes noted that blockchain technology is about cybersecurity and transaction validation rather than an investment scheme. He described the update as a “good development” because CIS regulations typically require strict oversight, registration, and compliance with the UK’s Financial Conduct Authority (FCA).
What Is Crypto Staking?
Staking is a critical feature of proof-of-stake blockchains like Ethereum and Solana. It allows users to lock their native tokens to help validate transactions and maintain the network’s security. In return, participants earn rewards in the form of additional tokens.
By clarifying that staking does not fall under the CIS category, the UK Treasury removes a layer of legal ambiguity, enabling staking services to operate without the burdensome requirements of CIS designation.
A Step Toward Comprehensive Crypto Regulation
This clarification aligns with the Treasury’s broader efforts to develop a comprehensive crypto regulatory framework, which is expected to roll out by early 2025. Economic Secretary to the Treasury, Tulip Siddiq, stated at a conference in November that future regulations would address staking services, stablecoins, and the wider crypto ecosystem.
Siddiq had previously voiced support for excluding staking from CIS regulations, emphasizing that the designation did not align with the nature of staking services. The new order reflects the government’s commitment to removing legal uncertainties for the crypto industry.
