In a significant development for the cryptocurrency sector, the UK government has officially excluded crypto staking from the classification of “collective investment schemes” (CIS), which are subject to strict regulatory oversight.
This change offers greater legal clarity for blockchain networks operating on proof-of-stake mechanisms, such as Ethereum and Solana.
The decision, outlined in an amendment to the Financial Services and Markets Act 2000, ensures that “qualifying crypto asset staking” will no longer fall under CIS regulations.
Unlike mutual funds or exchange-traded funds (ETFs), staking will not require authorisation or compliance with the stringent standards set by the Financial Conduct Authority (FCA). The amendment is set to come into effect on 31 January 2025.
A Step Towards Comprehensive Crypto Regulation
The move aligns with the UK Treasury’s broader strategy to regulate digital assets.
New guidelines addressing crypto staking services, stablecoins, and related activities are expected in early 2025.
Additionally, a comprehensive regulatory framework for crypto trading platforms and lending services is anticipated by 2026.
Ongoing Challenges in Crypto Oversight
While the government takes steps to modernise regulations, the FCA continues to face challenges in policing the crypto industry.
In 2024, the FCA received thousands of complaints about unlawful crypto advertisements but acted on just over half of the cases.
High-profile issues, such as TikTok’s alleged promotion of an unregistered crypto exchange and the UK service suspension by the Solana-based Pump.fun platform, highlight ongoing enforcement difficulties.
Balancing Innovation and Investor Protection
The Treasury’s decision to exempt staking from CIS regulations demonstrates a commitment to fostering innovation in blockchain technology while addressing regulatory gaps.
By reducing the compliance burden on staking activities, the UK positions itself as a hub for blockchain and crypto innovation, balancing technological advancement with the protection of investors.
This policy shift underscores the UK’s intent to lead in the evolving digital asset landscape while ensuring responsible regulatory measures are in place.
