The UK Treasury has declared that the proof-of-stake mechanisms that underpin specific blockchains, including Ethereum and Solana, will not be classified as collective investment schemes (CIS).
The Treasury’s order modifies a section of the Financial Services and Markets Act 2000 that pertains to group investments. “Qualifying crypto asset staking” is defined in the order as the authentication of contracts on the blockchain, a distributed ledger technology network, or “other comparable technology,” with effect on January 31.
According to Bill Hughes, the amendment is a positive development for crypto staking, as there are stringent regulations on the management and promotion of CIS, Consensys’ counsel and director of global regulatory matters. He also stated that blockchain operations should not be considered an investment but rather as cybersecurity.
In the United Kingdom, collective investment schemes are defined as any disposition in which participants generate income or profits, such as exchange-traded funds (ETFs) and investment funds.
In the regulation of CIS, the Financial Conduct Authority takes its mandate extremely seriously. Registration and authorization are requirements for participation in collective investment schemes. Additionally, monitors licensed by the agency will consistently verify the ongoing compliance obligations.
Staking is a process that enables network participants to receive rewards by securing their native currencies to validate transactions in blockchains such as Solana and Ethereum.
The Treasury committed in November 2024 to provide a crypto regulatory framework by early 2025. The most recent order appears to be a precursor to the Treasury’s commitment.
“This treatment of staking services defies logic in my opinion.” The government intends to proceed with the removal of this legal uncertainty consequently.
In the same period, Tulip Siddiq, the economic secretary to the Treasury, informed a London gathering that the framework would encompass crypto, stablecoins, and staking services.
Due to the strict rules, the local crypto industry had opposed the inclusion of crypto staking as a collective investment scheme, and Siddiq concurred.
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