The UK Treasury has introduced an amendment to the Financial Services and Markets Act 2000 (FSMA), set to take effect on January 31, 2025. This change distinctly separates blockchain validation activities, such as cryptocurrency staking, from collective investment schemes, providing clearer regulatory guidance for the crypto industry.

Staking, a process where users lock tokens to secure blockchain networks like Ethereum and Solana, has faced regulatory uncertainty. The amendment clarifies this by defining staking as a technical process, not an investment activity.

Crypto Staking Clarified as Technical Process

For UK crypto holders, this distinction means they can participate in network validation without the stricter oversight applied to investment schemes. This is especially important for proof-of-stake networks, where staking is essential for network security.

Bill Hughes, a lawyer at Consensys, emphasized, “The way a blockchain works is NOT an investment scheme. It’s cybersecurity.” His statement highlights the technical nature of staking compared to traditional investment vehicles.