UK Treasury confirms crypto staking falls outside collective investment scheme regulations

Staking will no longer be considered a collective investment scheme in the UK, according to a recent change by the UK Treasury.

UK Authorities have updated part of the Financial Services and Markets Act 2000, which regulates financial markets in the UK, 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 the chance to participate in transaction verification on proof-of-stake blockchain networks such as Ethereum. In return, participants often earn rewards in the form of additional coins.

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

These are regulated by the UK’s Financial Conduct Authority and require registration, authorization and ongoing compliance by approved administrators to ensure investor protection.

The updated law clearly states that ‘the regulations intended to qualify crypto asset staking do not amount to a collective investment scheme’, distinguishing staking from traditional investment models.

The change will take effect from 31 January and apply to all four countries that make up the United Kingdom.

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

This announcement is in line with broader efforts by British authorities to regulate crypto assets and staking services in a way that encourages innovation while reducing regulatory uncertainty.

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

In October, a proposal to classify digital assets as personal property was introduced to parliament in response to a consultation paper published by the Law Commission recommending that digital assets be brought within the scope of property law.