UK Redefines Crypto Staking Rules to Boost Blockchain Innovation

The UK government has clarified its stance on crypto staking by removing it from the classification of "collective investment schemes" (CIS), a category subject to strict regulatory oversight.

This shift provides greater legal certainty for blockchain networks using proof-of-stake mechanisms, such as Ethereum and Solana.

The change, outlined in an amendment to the Financial Services and Markets Act 2000, officially excludes “qualifying crypto asset staking” from CIS regulations. Unlike mutual funds or ETFs, which require authorization and strict compliance under the Financial Conduct Authority (FCA), staking will not face such burdens. The new rule is set to take effect on January 31, 2025.

This adjustment aligns with the UK Treasury’s broader plan to regulate digital assets. New guidelines for staking services, stablecoins, and other crypto activities are expected in early 2025, with a comprehensive regulatory framework for trading platforms and crypto lending anticipated by 2026.

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Despite these steps, the FCA continues to face challenges in overseeing the crypto industry. In 2024, it received thousands of reports about unlawful crypto advertisements, but action was taken in just over half the cases. Additionally, controversies like TikTok’s alleged unregistered crypto exchange and the Solana-based Pump.fun platform halting UK services highlight ongoing enforcement difficulties.

The Treasury’s move signals an effort to support innovation in the crypto sector while addressing regulatory gaps. By exempting staking from rigid CIS rules, the UK is positioning itself to accommodate blockchain technologies while still protecting investors.

Alexander Zdravkov