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- The UK Treasury said crypto staking is not a collective investment scheme.
- With its pro-crypto stance, the UK is becoming a hub for digital currencies.
The UK Treasury, the government’s economic and finance ministry, has revised regulations regarding crypto staking. Under the new revision, the Treasury clarified that crypto staking is not a “collective investment scheme.”
Impact of the New Rules on Crypto Staking Users
The new amendment, which will come into effect on January 31, 2025, is a positive step for those involved in staking. Staking involves blockchain users locking up a network’s native token for a specific time.
These users help validate on-chain transactions on proof-of-stake blockchain networks like Ethereum and Solana. Participants earn rewards in exchange, usually in the form of additional tokens.
Under the new rules, staking will no longer fall under the same regulations as investment funds like ETFs and investment funds. The amended rules specifically separate staking from traditional investment methods.
The UK Treasury emphasized that staking rewards users for protecting the network rather than pooling funds for shared profits.
Meanwhile, traditional investment funds are subject to strict regulatory frameworks like the requirement of authorization and registration. The amended rules specify ‘ separating staking from traditional investment methods.
The Treasury’s recent action has received widespread applause within the crypto industry.
In an X post, Bill Hughes from Consensys explained that staking is primarily about network security, not investment. According to Hughes, this characteristic distinguishes it from collective investment schemes focused on the traditional market and generating financial returns.
Good news frens. It looks like that, by the end of the month, proof of stake mechanisms underlying certain blockchains (e.g. #Ethereum #Solana) will not be considered collective investment schemes under UK law. This is a good development because the management and promotion of… pic.twitter.com/JJgEO5rmPP
— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) January 9, 2025
The move is part of a broader effort from the UK government to establish clearer regulations for the crypto industry. The government aims to ensure crypto services can operate without confusion while remaining compliant with established laws.
The UK Government Focus Crypto Regulations
Besides staking, the UK government is developing legislation for other aspects of crypto, like stablecoins and Non-Fungible Tokens (NFTs). The goal is to provide a well-balanced framework that promotes innovation while maintaining market integrity and legal compliance.
Meanwhile, the UK Parliament received a proposal to categorize digital assets as personal property. The action comes in response to a Law Commission consultation document that suggested including digital assets under property law.
Furthermore, the Treasury announced plans to develop crypto-specific legislation in November, emphasizing stablecoins and staking exemption. They claim this legislation would make the UK more attractive to blockchain firms.
Robinhood plans to launch options trading in the country in early 2025, targeting the UK’s expanding retail investors. As CNF recently reported, the trading platform has already received approval from the UK Financial Conduct Authority (FCA).
Similarly, GSR, a global crypto trading company, has received a regulatory license to operate in the UK. CNF updated that the license allows the company to offer clients in the UK Over-the-Counter (OTC) trading and programmatic execution services.
If the UK continues its friendly crypto policies, more crypto businesses looking for a safe and regulated environment could troop into the country.
