The UK Treasury has revised a law to make it clear that activities like crypto staking, essential for proof-of-stake blockchains such as Ethereum and Solana, will not be considered as “Collective Investment Schemes.” These schemes are usually subject to stringent regulations.
On January 8th, an order from the department revised a portion of The Financial Services and Markets Act 2000 concerning group investments. This revision clarifies that arrangements for qualifying cryptocurrency staking do not constitute a Collective Investment Scheme (CIS).
It makes clear that ‘verifying cryptoasset staking’ is essentially verifying transactions within a blockchain or any comparable distributed ledger technology network.
The updated law will come into effect on Jan. 31.
According to Bill Hughes, ConsenSys’ legal advisor and head of global regulatory affairs, this is a positive move since the oversight and marketing of CIS (whatever that stands for in your context) are subject to stringent regulations. He made this statement on platform X on January 9th.
“The way a blockchain works is NOT an investment scheme. It’s cybersecurity,” he added.
In the United Kingdom, collective investment schemes refer to any setups where participants share in the earnings or returns derived from them. These earnings could be in the form of exchange-traded funds (ETFs), mutual funds, or other types of investments.
In my role as an analyst, I’m bound to abide by the regulations set forth by the nation’s Financial Conduct Authority. This includes registering initially, obtaining authorization, and adhering to ongoing compliance obligations, all of which are overseen by approved management agencies.
In simpler terms, staking involves keeping your native tokens (like those used on Ethereum or Solana) in a locked state. This stored value is then utilized to confirm transactions on these networks, potentially rewarding you with additional tokens as compensation for your contribution.
It appears that the release of this order marks an initial step towards the Treasury’s commitment made in November, which promised to have a draft regulatory framework for cryptocurrencies ready by early 2025.
At a gathering held in London last November, Tulip Siddiq, Economic Secretary to the Treasury, announced that the new regulations will apply to platforms offering cryptocurrency staking services, digital currencies known as stablecoins, and the field of cryptocurrency in general.
In the local cryptocurrency sector, there was an effort made to avoid classifying staking as a joint investment plan because of regulatory differences, and Siddiq concurred with this view.
She expressed that it seems illogical for staking services to receive such treatment, implying that the government plans to address this ambiguity in the law by making appropriate adjustments.
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2025-01-10 04:28