Many countries feel the need to regulate crypto. That’s a challenge for many investors, with some countries tightening the reins. The United Kingdom is leading by example by creating a tax system with direct stakeholder input.
Call for evidence
The government has filed a “call for evidence” as it seeks ways to regulate and tax crypto in decentralized finance (De-Fi). Whether this line is positive or negative depends on the findings of this call.
The initiative comes from the UK government’s tax authorities, Her Majesty’s Revenue and Customs (HMRC). You might think that crypto investors should fear the British tax authorities, but the call shows that it’s not so bad:
The government is particularly interested in whether the administrative burden and costs for taxpayers involved in this activity can be reduced and whether the tax treatment can be better aligned with the underlying economics of the transactions involved.
The whole De-Fi corner is being called into question
In April, the UK announced a package of measures “aimed at ensuring the UK financial services sector remains at the forefront of technology, attracting investment and jobs and expanding consumer choice”.
Not wanting to stand in the way of crypto development, they are “engaging with investors, professionals and companies involved in deFi activities, including technology and financial services companies; trade associations and representative bodies; Educational Institutions and Think Tanks; and legal, accounting and tax advice”.
So it will be a big task and will take a lot of time. However, HMRC says it should not take more than two months. The closing date for this process is August 31.
Yet the British government is more nuanced in its approach. This makes sense as other countries view crypto a little more critically. HMRC said the measures “also aim to address, where appropriate, concerns raised by stakeholders about the taxation of DeFi loans and advances”.