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Source: FinTax
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The UK Treasury Department has amended the Financial Services and Markets Act (FSMA), which has come into effect on January 31.This revision excludes cryptocurrency pledges from collective investment plans.Under this change, staking cryptocurrencies such as Ethereum (ETH) and Solana (SOL) will be considered only as a blockchain verification process and will no longer be subject to regulatory requirements applicable to collective investment plans.Previously, due to vague regulatory definitions, pledges were at risk of being classified as traditional collective investment plans, and these investment instruments were subject to stricter FSMA regulations.
FinTax brief review:
FSMA is one of the most important financial regulatory regulations in the UK, and it began regulating cryptocurrency pledges as a collective investment scheme (CIS) in early 2023.The so-called collective investment plan refers to a financial arrangement in which by collecting funds from multiple investors, a professional management team is unified in investment operations, and investors share returns or risks according to their shares.The act of pledging cryptocurrencies has many similarities in form, which makes the UK identify it as a collective investment plan of some kind.This revision means that the pledge activities involved in cryptocurrencies represented by ETH and SOL will no longer need to meet the strict regulatory requirements of collective investment plans.Specifically, the amendment clearly states that pledge activities are essentially different from collective investment plans, because the blockchain verification process involved in pledge mainly refers to the staking participants who lock in cryptocurrencies to verify transactions on the blockchain to ensure the network’sSecurity, which is fundamentally different from the nature of the fund pool and the return on investment mechanism involved in traditional collective investment plans.
According to FSMA regulations, CIS needs to meet strict standards from establishment to operation.For example, the management company should have stable capital and financial capabilities, disclose investment details in a timely and transparent manner, and implement customer due diligence (CDD), etc.Therefore, excluding cryptocurrency staking from CIS will reduce the compliance costs of the cryptocurrency staking ecosystem, thereby promoting the prosperity and development of cryptocurrency staking in the UK.Of course, this objectively reduces the protection of British cryptocurrency investors and increases their risk of investment losses.However, from the perspective of balancing regulation and innovation, the concessions made by the British regulatory authorities in this revision have left more room for innovation and development for the domestic crypto industry, which is conducive to the long-term interests of the crypto industry.
From a global perspective, the field of cryptocurrency pledge has always been a regulatory hotspot in various countries.For example, in the EU, MiCA puts freely obtained cryptocurrencies in the scope of jurisdictional exemptions, but items that require users to spend a lot of Gas interactions and require cryptocurrency staking are excluded from the exemptions.Japan and Australia have conducted specific analysis of cryptocurrency pledge behavior. If the pledge income is the income from financial products, then the pledge behavior also needs to comply with relevant financial regulations.Singapore expressly prohibits providing cryptocurrency lending and pledge services to individual investors.
In short, the regulation of cryptocurrency pledge is an important issue that governments must face, but different countries have different attitudes to this.The importance of the UK’s revision of FSMA is not only that it further clarifies the regulation of staking activities, but also that it shows the UK’s strategic position in the global cryptocurrency field: maintain flexibility in regulation, cautiously relax restrictions, and avoidToo strict rules restrict industry development.This change is expected to attract more blockchain project players and crypto companies to the UK market and help the UK seize the initiative in global crypto financial innovation.
