UK government seeks public input on DeFi taxation
The government of the United Kingdom is asking the public for input on the taxation of crypto asset loans and staking in the context of Decentralized Finance (DeFi).
DeFi is an umbrella term that refers to financial applications that are built on top of blockchain technology. This could include anything from lending to borrowing and staking platforms.
In particular, the government is interested in gathering information on the taxation of crypto asset loans and staking. Her Majesty’s Revenue and Customs (HMRC) call for evidence paper, published on Tuesday, described its intention to study whether administrative hassles and costs may be reduced for taxpayers who participate in the emerging industry, as well as if the tax treatment might be more aligned with the transactions’ fundamental economics.
HMRC is seeking input from investors, professionals, and organizations involved in DeFi-related activities such as technology and financial services companies, trade associations and representative bodies, educational institutions and think tanks, and legal, accounting, and tax advisory businesses. Interested parties have until 31 August 2022 to submit their response via an email provided by the agency.
— Cryptofornia.x (@CryptoforniaX) July 5, 2022
Following the call for evidence, the government will publish a summary of responses together with details of its next steps, as per the announcement.
In April, the government released a list of plans to make the United Kingdom a global crypto powerhouse. According to Economic Secretary John Glen, among them was “major surgery” on the tax system “to make it work more easily for crypto.”
In May, the government launched a consultation to give the Bank of England authority to appoint administrators to manage insolvency arrangements for failed stablecoin issuers.
When it comes to cryptocurrency regulation, a former Chancellor of the United Kingdom has recently expressed fears that the country is falling behind its competitors in Europe. As reported by Cointelegraph, Philip Hammond, the United Kingdom’s Chancellor of the Exchequer from 2016 to 2019, stated that there has been a clear lack of direction and cohesion when it comes to cryptocurrency policy.