UK Proposes Tax Relief for DeFi Users in Bid to Foster Crypto Adoption
The UK government has unveiled a groundbreaking tax framework aimed at reducing burdens for participants in decentralized finance. Under the new proposal, capital gains tax WOULD only apply when users sell their tokens—not during routine DeFi activities like lending or staking.
This no-gain, no-loss approach treats token deposits and withdrawals as non-taxable events. The move could significantly lower compliance complexity for liquidity providers and borrowers while making the UK more competitive in the global crypto landscape.
By aligning taxation with actual economic events rather than protocol interactions, the reforms address a major pain point for DeFi adoption. Market participants have long argued that immediate tax liabilities on unrealized gains created unnecessary friction in decentralized markets.
