UK Scraps Capital Gains Tax on DeFi Lending and Liquidity Pools

The UK's HM Revenue & Customs (HMRC) has announced a change to its policy on taxing cryptocurrency assets in Decentralized Finance (DeFi) lending protocols and liquidity pools. Starting April 2027, depositing crypto into these platforms will be treated as 'no gain, no loss,' deferring capital gains tax until an actual disposal is made.

The new rule aims to alleviate the administrative burden created by HMRC's 2022 guidance, which considered moving tokens into a DeFi arrangement as a taxable disposal. This meant users faced capital gains tax on paper before selling their assets.

Stani Kulechov, founder of Aave, a leading DeFi lending protocol, praised the move, calling it 'the right direction.' He credited industry feedback for the shift and noted that this change demonstrates how industry input can shape policy.