<img src="https://cryptoslate.com/wp-content/uploads/2024/10/ethereum-staking-1.jpg” />
The UK Treasury has introduced a amendment to the Financial Services and Markets Act of 2000 (FSMA), effective January 31, to exclude crypto betting from classification as a collective investment scheme.
Under this change, bet ethereum (eth) and Solana (SOL) will be recognized solely as a blockchain validation process, which will no longer be subject to the regulatory requirements applicable to collective investment undertakings.
Previously, vague regulatory definitions created the risk of categorizing betting alongside traditional investment vehicles, which are subject to stricter FSMA regulations.
The amendment clarifies that staking, which involves participants locking cryptocurrencies to validate blockchain transactions and secure the network, is fundamentally different and warrants a tailored regulatory framework.
Bill Hughes, Consensys lawyer, welcomed the move as a significant step for the industry, emphasizing that UK law traditionally regulates collective investment schemes with a heavy-handed approach that would have stifled growth.
He added:
“The way a blockchain works is NOT an investment plan. It is cybersecurity.”
Consequently, companies and individuals participating in blockchain now have regulatory clarity, allowing them to operate without the burden of compliance measures designed for collective investment schemes.
Notably, the move aligns with the UK's broader strategy of encouraging innovation in the crypto sector while maintaining proportionate oversight to protect market participants.
In November last year, the UK government announced would develop regulations to boost regional innovation. The plans included guidelines for stablecoins and a new regulatory status for betting. The aim is to avoid hindering technological innovation and leaving the UK behind in the crypto arms race.
Unique process
The amendment explicitly recognizes the unique nature of betting, ensuring that it is not subject to inadequate regulatory frameworks.
It defines a “qualifying crypto asset” as a crypto asset that meets the criteria specified in existing UK legislation, which recognizes these assets for regulatory purposes.
Meanwhile, “blockchain validation” addresses the validation of transactions on blockchain networks or similar distributed ledger technologies, often supported by staking mechanisms.
The amendment is particularly relevant for major blockchain networks such as ethereum and Solana, which rely on staking for transaction validation. The change could boost value accumulation for companies that own these assets and encourage the offering of exchange-traded products that take advantage of UK holdings.
