Staking in the United Kingdom will not be classified as a collective investment scheme, thanks to a recent amendment made by the U.K. Treasury.
Recently, U.K. Authorities made changes to a section of the Financial Services and Markets Act 2000, which governs financial markets in the U.K., to explicitly state that crypto staking does not fall under the definition of a “collective investment scheme.”
For those unfamiliar, staking is a process in which users lock up a network’s native tokens in order to participate in transaction validation on proof-of-stake blockchain networks like Ethereum. In return for their participation, users receive rewards, typically in the form of additional tokens.
The Treasury’s amendment aims to clarify that staking does not meet the criteria of a collective investment scheme. These schemes involve pooling funds for shared profits or income, such as mutual funds or exchange-traded funds, and are regulated by the Financial Conduct Authority in the U.K., requiring authorization and compliance by approved managers to protect investors.
The updated legislation explicitly states that ‘arrangements for qualifying crypto asset staking do not amount to a collective investment scheme,’ distinguishing staking from traditional investment models.
Effective from January 31, this amendment applies to all four constituent countries of the United Kingdom.
Bill Hughes, a lawyer at Consensys, expressed positivity towards this development, stating that “the way a blockchain operates is not an investment scheme” but rather a form of “cybersecurity.”
This clarification is in line with the broader efforts of British officials to regulate crypto assets and staking services in a manner that promotes innovation while reducing legal uncertainty.
Earlier, the Treasury had announced plans to introduce crypto-specific legislation, focusing on stablecoins and staking exemptions to attract blockchain companies to the U.K.
In response to a consultation paper by the Law Commission recommending the inclusion of digital assets under property law, a proposal was presented in parliament in October to categorize digital assets as personal property.