The United Kingdom Treasury has exempted cryptocurrency staking from the definition of a “collective investment scheme.” Meanwhile, the development surfaced after the UK Treasury amended its financial legislation to clarify the uncertainty relating to the categorization of crypto staking.
More so, the new legislation will take effect from January 31, 2025, after its submission before the UK parliament on Thursday. Accordingly, the amendment of the Financial Services and Markets Act 2000 comes with a new inclusion explaining that crypto staking doesn’t suit the categorization.
By that, virtual assets service providers can now provide crypto staking options without violating the regulations relating to CIS. Furthermore, the modification describes crypto staking as the process of validating transactions on a blockchain or distributed ledger technology network.
Referencing the definition, the UK Treasury disclosed that the CIS regulations didn’t cover staking activities. Therefore, the government concluded that subjecting crypto staking to CIS laws isn’t ideal. In the new provision, the UK Treasury admitted how the oversight regulations for CIS would have impacted virtual assets staking.
It’s worth mentioning that the Financial Services Authority came into existence through the UK Financial Services and Markets Act 200. The act made the agency the sole regulator of insurance, banking, and investment businesses.
How Crypto Regulation is Gradually Taking Shape in the UK
The United Kingdom is yet to have a comprehensive regulatory framework but recent developments are already indicating what regulatory guidelines may look like. Following the collapse of FTX, the United Kingdom disclosed plans to regulate the cryptocurrency market and reduce the presence of bad actors in the industry.
Then, the economic secretary, Andrew Griffith revealed that the UK is committed to growing its economy and supporting emerging innovations including crypto. Griffith added that the UK must protect investors who are supporting crypto to ensure transparency.
In October 2023, the UK parliament approved a bill that permits law enforcement agencies to confiscate digital assets used for illegal activities. According to a Binbits report, the bill; Economic Crime and Corporate Transparency Bill is designed to combat the use of cryptocurrency for criminal activities like fraud, drug trafficking, money laundering, and terrorism financing.
However, the bill surfaced as part of the UK’s economic crime plan for 2023 to 2026. The report revealed that as part of its economic crime plan, the UK aims to stop the use of cryptocurrencies for illegal purposes.