UK Considers Taxation Revisions for DeFi Lending and Staking Activities – Here's The Latest
According to a consultation document, the UK government is seeking views on tax modification for decentralized finance (DeFi) lending and staking.
The government has initiated an open consultation to gather insights for drafting improved tax legislation on DeFi transactions.
The consultation aims to establish a framework that aligns taxation on crypto assets involved in DeFi transactions with their underlying economic substance.
The proposed reforms will reduce the administrative burden on consumers.
The UK government wants to revise the DeFi lending and borrowing tax treatment amid several calls for clear legislative pathways for crypto assets and products.
As such, the HM Revenue and Customs (HMRC) seeks an open consultation to hear from DeFi investors, professionals, and firms.
Also, the agency wants insight from technology and financial services firms, trade associations, and representative bodies, including legal, accountancy, and tax advisory firms.
Per the publication, the consultation will run for several weeks, from April 27 to June 22, 2023.
The UK government aims to create a safe and sustainable environment for rapid innovation in the crypto and blockchain industry.
Doing so will place the United Kingdom at the forefront of innovation in the novel fintech industry.
The government, therefore, plans to achieve that by establishing comprehensive regulatory and tax treatment of cryptocurrencies.
The open consultation is the sequel to a call for evidence on the taxation of DeFi lending and borrowing on July 5, 2022.
Last April, the UK Treasury sought measures to retain the country’s leadership position in Fintech.
Among the measures announced was to explore and resolve issues on taxation of DeFi lending and staking.
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