As the crypto business grows, governments throughout the world, including the UK, are looking at ways to regulate and tax digital assets.
Her Majesty’s Revenue and Customs (HMRC) published a request for evidence on the taxation of crypto-asset loans and staking in the context of Decentralised Finance (DeFi) on July 5.
As said on the call: “The government is particularly interested in determining if administrative hurdles and expenses might be minimised for taxpayers engaged in this activity and whether the tax treatment can be better linked with the economics underpinning the transactions involved.”
The HMRC wants to hear from investors, professionals, and businesses participating in DeFi activities, including technological and financial service corporations, trade groups and representation bodies, academic institutions and think tanks, and legal, accounting, and tax consulting firms. The request for evidence will remain available until August 31, 2022, as indicated.
British government interest in crypto
In April, the U.K. government unveiled a package of measures “intended to ensure the UK financial services industry continues at the forefront of technology, attracting investment and employment and expanding consumer choice.”
As reported by Finbold, the package included proposals to recognise stablecoins as a viable form of payment, prompting several crypto CEOs to express the conviction that market regulation was undergoing a sea change.
The HMRC noted in its latest request for evidence that the measures included “an intention to explore and, where appropriate, resolve concerns highlighted by stakeholders concerning the tax treatment of DeFi loans and stakes” and that “this call for evidence attempts to inform that review.”
The Director-General for Financial Services at the Ministry of Finance indicated in early June that the U.K. plans to construct a “sandbox” for testing distributed ledger technology (DLT) projects in 2023, five months after an MP suggested the U.K. might become the home of FinTech and Bitcoin.
