UK Treasury confirms crypto staking falls outside collective investment scheme regulations

Staking will not be considered a collective investment scheme in the United Kingdom, according to a recent amendment by the U.K. Treasury.

U.K. Authorities have updated a section of the Financial Services and Markets Act 2000, which regulates financial markets in the U.K., to clarify that crypto staking is not a “collective investment scheme.”

Staking is a process where blockchain users lock up a network’s native tokens for a chance to participate in transaction validation on proof-of-stake blockchain networks like Ethereum. In return, participants earn rewards, usually in the form of additional tokens.

The Treasury’s amendment clarifies that staking does not fit the definition of a collective investment scheme. A CIS involves arrangements where individuals pool their funds for shared profits or income, such as exchange-traded funds or mutual funds. 

These are regulated by the U.K.’s Financial Conduct Authority, requiring registration, authorization, and ongoing compliance by approved managers to ensure investor protection.

The updated law explicitly states that ‘arrangements for qualifying crypto asset staking do not amount to a collective investment scheme,’ distinguishing staking from traditional investment models.

The amendment will be effective starting Jan. 31 and applies to all four constituent countries of the United Kingdom.

Commenting on the development, Bill Hughes, a lawyer at Consensys, described it as a positive step, stating that “the way a blockchain works is not an investment scheme” but rather a form of “cybersecurity.”

This clarification aligns with broader efforts by British officials to regulate crypto assets and staking services in a way that fosters innovation while reducing legal uncertainty. 

As previously reported by crypto.news, in November, the Treasury announced plans to introduce crypto-specific legislation, focusing on stablecoins and staking exemptions to make the U.K. more appealing to blockchain firms.

In October, a proposal to categorize digital assets as personal property was presented in parliament as a response to a consultation paper published by the Law Commission, which recommended including digital assets under property law.