U.K. tax authorities seek public consultation on DeFi tax treatment

UK tax authorities HM Revenue and Customs Agency (HMRC) began public consultation on DeFi lending and tax treatment of staking on July 5th.

Alex Bosinceanu, the chief bureaucrat of the investigation, asked DeFi stakeholders in the United Kingdom to provide evidence of a review on this topic.

HMRC wants to hear from investors, professionals and companies engaged in DeFi activities, such as technology companies and financial services companies. Industry groups and representatives; academic and think tanks. Legal, accounting, It’s a tax accountant company. “

The consultation period will be two months from July 5th to August 31st, after which a summary of the responses and details of what will happen next will be published.

Answers or inquiries can be made at the following locations: [emailprotected]

UK Government Wants Public Consultation on DeFi Tax Processing

As part of FinTech sector strategyThe UK Government has expressed its intention to develop a tighter integration between crypto assets and the legacy financial services sector. The comprehensive goal is to position the UK as a global hub for financial innovation.

Part of this strategy involves forming a clear and appropriate tax treatment for digital assets.

April 4th Prime Minister Rishi Sunak I posted about the government’s plans to transform the UK into a “cryptoasset technology hub”. Among the goals was a commitment to “strengthen the competitiveness of the UK tax system” to promote the development of the crypto sector.

Preliminary findings show that the government is aware that current tax law cannot explain the (sometimes) complex activities of DeFi staking and lending. Specifically, Bosinceanu’s consultation statement highlighted the case where a taxable event occurred but the property was not disposed of. Therefore, the tax burden on DeFi investors will increase unreasonably.

“It is said that there are situations where tax law treats transactions as disposal and retains effective economic ownership of crypto assets.”

A positive step from the British government

The purpose of this study is to gather evidence of how existing tax systems affect DeFi activities and to advise lawmakers on “options to reduce friction.”

However, consulting is only relevant for DeFi lending and staking. The lending aspect includes the provision of pooled liquidity, but does not include DeFi activities as part of transactions such as the operation of the DeFi platform.

On June 22, HM Treasury announced that it would revoke plans to require service providers to collect data on “unhosted wallets.” This is a move that has received relief from privacy advocates.

Combined with Defy’s talks, Snack Prime Minister seems to be genuine in his attempt to turn Britain into a crypto hub.