UK TreasureSeeking ideas on taxation of DeFi staking and lending.
The proposed regulatory changes aim to simplify the way DeFi returns are taxed and reduce the administrative burden for taxpayers. UK Revenue and Customsby April 27consultation initiated in June 22 It will continue until . In this context, the government’s recommendations from investors, professionals and companies, representative organizations and think tanks engaged in DeFi activities. DeFiThey will be asked to present their views on taxation.
Consultation Aims to Create DeFi Framework
The taxation of lending and borrowing in decentralized finance (DeFi) protocols could soon change, as the Treasury’s taxation arm seeks ideas for a possible new regime.
According to the proposed law changes, crypto used in DeFi transactions is usually a Capital Gains Tax It will not be considered a divestiture or sale for tax applications that trigger the (CGT) process. Instead, CGT will be applied and taxable when cryptocurrencies are disposed of in a non-DeFi transaction.
According to the consultation, for a transaction to be considered a DeFi transaction, it must meet certain criteria.
Specifically, it requires the initial transfer of crypto-assets from a lender to a borrower, or via a smart contract, in which he is obliged to return debt tokens. In addition, the lender must have the right to withdraw the same amount of tokens originally loaned or staked.
The purpose of the consultation is to establish a framework that determines the taxation of crypto assets used in DeFi lending and staking, making it easier for users to comply with regulations.
Consultation is the second phase of a five-stage process, which will be followed by the drafting, implementation and monitoring of legislation and ultimately the review and evaluation of change. British governmenthad taken the first step of the process in July by requesting feedback on the taxation of crypto-asset loans and staking in the context of DeFi.
It was reiterated that, in addition to simplifying the administrative process, reducing costs for taxpayers participating in DeFi is the main goal, while at the same time exploring how tax enforcement can better reflect the economic essence of these transactions.
