The UK Treasury has officially updated its regulations, confirming that crypto staking will no longer be classified as a Collective Investment Scheme (CIS) under the Financial Services and Markets Act 2000.
Effective January 31, this change aims to differentiate staking from traditional investment structures like mutual funds or exchange-traded funds.
Staking, a process where users lock blockchain tokens to validate transactions on proof-of-stake networks (e.g., Ethereum) in exchange for rewards, was previously unclear in its regulatory treatment. The new amendment clarifies that staking does not meet the legal definition of a CIS, which typically involves pooled funds for shared profits and is regulated by the UK Financial Conduct Authority (FCA).
Under the revised framework, staking services will no longer face the stringent registration, authorization, and compliance requirements imposed on collective investment schemes. Instead, the amendment positions staking as a distinct blockchain operation rather than a conventional financial product.
This regulatory update aligns with the UK government’s broader strategy to balance industry oversight with fostering blockchain innovation. Bill Hughes, a lawyer at Consensys, applauded the change, emphasizing that staking serves as a cybersecurity mechanism rather than an investment vehicle.
The amendment complements other initiatives by the Treasury to develop crypto-specific legislation, including regulations for stablecoins and further exemptions for blockchain-based activities. These efforts are designed to make the UK an attractive destination for blockchain firms while reducing regulatory uncertainty.
Meanwhile, a recent FCA report highlighted rising cryptocurrency awareness in the UK, with familiarity increasing from 91% to 93% of residents in 2024. The average value of crypto holdings also grew from £1,595 to £1,842. Notably, family and friends emerged as the primary source of crypto knowledge among those new to the space, while 10% admitted to investing without prior research. Despite these trends, the FCA reiterated its warnings about crypto’s unregulated status, cautioning investors about associated risks.
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