The United Kingdom’s Treasury recently made a bold legislation move to promote blockchain technology. This aims to attract crypto-native companies to the domestic digital asset industry. On January 9, the Treasury amended key financial legislation to clarify that the collective investment scheme (CIS) regulatory regime does not cover crypto staking.
The amendment order is expected to provide clear guidelines for PoS networks like Ethereum and Solana. This would set up blockchain technology for mass adoption. It will also allow UK-based staking service providers to operate free from the CIS sector, which keen observers believe is “heavily regulated” by the Financial Conduct Authority (FCA).
UK’s Bold Move to Promote Crypto Innovation
According to the amendment order, crypto staking doesn’t fit the definition of a CIS. A CIS scheme usually involves individuals pooling their funds for shared income or profits. CIS investors often buy into popular investment vehicles, such as mutual funds and exchange-traded funds (ETFs).
The move separates digital asset staking from traditional investment models regulated under the Financial Services and Markets Act 2000. This exempts the blockchain validation process from the rigid CIS regulatory framework. The framework, which threatened to stifle innovation, requires CIS activities to be registered and authorized by the FCA. Additionally, they are subjected to ongoing compliance standards that ensure investor protection.
“The regulations for the establishment, operation, and winding up of collective investment schemes were not designed with cryptoasset staking in mind, and their application would present a significant hindrance to the effective operation of blockchains and staking arrangements provided to customers in the United Kingdom,” the amended legislation read.
The order comes into effect on January 31. It extends to four UK constituent jurisdictions, including England and Wales, Scotland, and Northern Ireland. It was presented before the UK parliament on January 9 after the Treasury announced plans to introduce crypto-centric regulations in November last year. The treasury hinted that the legislation would focus on stablecoins and staking to make the UK market “more appealing” to blockchain companies.
Meanwhile, the Law Commission recently published a consultation paper proposing to categorize digital assets as personal property. The proposal was presented to parliament in September last year. If passed, it would assign legal status to blockchain-based holdings such as NFTs, RWAs, and virtual currencies. The bill marks one of the first crypto-related initiatives by the Prime Minister Keir Starmer-led Labour government.
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