The UK Treasury has revised the Financial Services and Markets Act 2000 (FSMA) to exclude cryptocurrency staking from the scope of collective investment schemes. According to the revision, the staking of Ethereum (ETH) and Solana (SOL) will now be recognized solely as a blockchain validation process and will no longer be subject to regulatory requirements related to collective investment schemes. This revision will take effect from January 31.
Previously, due to unclear regulatory definitions, cryptocurrency staking could have been classified as a traditional collective investment tool, requiring compliance with stricter FSMA regulations. This revision clarifies that staking is the act of participants locking up cryptocurrency assets to validate transactions and secure the blockchain network. It is different from the nature of traditional investment tools, thus requiring a specialized regulatory framework.
Bill Hughes, a lawyer at Consensys, supports this revision and believes it is a significant development for the industry. He emphasized that “the operation of blockchain is not an investment scheme but a mechanism for network security.” Hughes pointed out that the UK traditionally imposes strict regulations on collective investment schemes, and if cryptocurrency staking were included, it could severely restrict industry development.
This revision provides regulatory clarity for businesses and individuals involved in cryptocurrency staking, relieving them from the compliance burden associated with collective investment schemes and allowing for more flexible operations. Furthermore, this measure aligns with the UK’s overall strategy of promoting innovation in the cryptocurrency industry. The UK government previously announced in November of last year that it would develop a new regulatory framework specifically for stablecoins and staking to support technological innovation and ensure the UK maintains a leading position in the global cryptocurrency competition.
