Two days after the tax deadline, on the 2nd of February, HMRC published new DeFi tax guidance. If the guidance maintains it can severely damage DeFi in the UK.
How Detrimental Is The UK Government Regulation For DeFi In The UK
Moreover, the guidance has significant implications on the future of DeFi in the UK and could result in other countries following suit.
In fact, the guidance mainly focused on staking, lending, and borrowing. Failing to plan could lead to double to triple the amount of tax.
Furthermore, CryptoUK, a trade body that represents the UK digital asset sector, put out a statement on the 2nd of February. Commenting on the announcement, Ian Taylor, Executive Director of CryptoUK, said: “HMRC treats crypto assets as property for tax purposes.”
Ian Taylor states other regulatory bodies in the UK regulate crypto assets similar to other financial services and products. Additionally, Taylor adds, “This treatment of crypto lending and staking creates a burden for any crypto investor”.
What’s more, there is an interesting Twitter thread on the topic by Alpha Please. It highlights how “Generation X who made remarkable gains on the stock in the last 30-40 years can borrow against their assets and not be penalized.”
Alpha Please, states, “The UK is simply giving up an opportunity to be at the forefront of a financial revolution.”
Find out more about how South Korea’s crypto tax could affect earnings from NFT sales.
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