The UK’s HM Treasury has launched an open consultation aimed at finding a suitable tax policy for DeFi activities, particularly those involving lending and staking. The proposed changes seek to better align tax policies with the underlying economic substance of DeFi transactions, while also reducing the administrative burden on users. The consultation hopes to contribute to the formulation of a crypto tax regime in the UK, with feedback to be sourced from key stakeholders in the DeFi space, including tech and financial firms, investors, and professionals, among others. The consultation also explores legislative changes for tax treatment of lending and staking activities in the industry. HM Treasury expects the proposals to inform the UK’s crypto tax guidelines in 2024, the same year the EU’s crypto law MiCA is anticipated to come into effect.
