UK pushes tax regime favorable to DeFi investors

The UK government is pursuing a new tax regime that eases the tax burden on DeFi (decentralized finance) users. The core measure is to revise the existing rule that treats DeFi deposit actions as asset disposals, delaying the tax point to the point when real gains are realized.

On the 27th (local time), according to crypto-focused media CoinDesk, HM Revenue & Customs (HMRC) is considering introducing an NGNL (No Gain, No Loss) tax model that more reasonably reflects the activities of DeFi users. If the new rules are applied, depositing crypto to protocols for DeFi lending or liquidity provision would not immediately trigger capital gains tax.

Under current UK tax law, deposit actions are treated as asset disposals, so capital gains tax could be imposed even for lending purposes, and this has been pointed out as a structure unfavorable to DeFi users.

If the NGNL approach is finalized, taxation will be deferred until actual gains or losses are realized when assets are monetized. In this regard, Aave's CEO called it "a big win for UK DeFi users."

Whether the new tax regime will be adopted will be finally determined after undergoing regulatory review procedures.