UK Proposes Tax Relief for DeFi Crypto Transactions
Britain's tax authority has drafted a proposal that could exempt decentralized finance users from capital gains taxes when depositing crypto assets into protocols. The 'no gain, no loss' framework would defer taxation until assets are actually sold or redeemed rather than triggering immediate tax events upon deposit.
Industry heavyweights including Aave, Binance, and Andreessen Horowitz have endorsed the plan, which addresses a key pain point in DeFi adoption. Current UK rules impose 18-32% capital gains taxes on protocol deposits regardless of whether users realize actual profits.
The consultation period remains ongoing, with HM Revenue & Customs collecting stakeholder feedback before finalizing legislation. Market participants view this as part of broader UK efforts to establish clearer crypto regulations while maintaining tax compliance.
