The UK Government has passed legislation to confirm that staking does not fall within the regulatory scope of Collective Investment Schemes.
The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 comes into effect on 31 January 2025.
Staking is now defined as a concept as a consensus mechanism used by proof of stake blockchains. As the UK moves closer to establishing an overarching regulatory framework for digital assets, for firms navigating the boundaries between established financial services regulation and new regulatory landscapes, this provides welcome clarification. The statutory instrument is helpful for assessing the status of projects and offerings in this legislative context. Using the concept of "the use of a qualifying cryptoasset in blockchain validation", the statute defines staking as the validation of transactions on a blockchain or a network that uses distributed ledger technology (or similar).
It is noteworthy that the government explanation accompanying the regulation holds the costs of current uncertainty and the number of firms affected by it as a key reason for the change.
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