More and more countries are finding it necessary to regulate crypto. This is a challenge for many investors, as some countries are pulling the reins hard. The UK is leading by example by creating a tax system with input from those directly involved.
Call for proof
The government has put forth a “call for proof” as it seeks methods to regulate and possibly tax crypto in Decentralized Finance (De-Fi). Whether this tax will be positive or negative depends on the findings of this call.
This initiative comes from the UK government tax authority called ‘Your Excellency Revenue and Customs (HMRC)’. You’d think crypto investors should be afraid of the UK tax authorities, but the call shows it’s not that bad:
The government is particularly interested in whether administrative burdens and costs can be reduced for taxpayers engaging in these activities and whether tax treatment can be better aligned with the underlying economics of the transactions involved.
The whole De-Fi corner is being questioned
The UK announced in April a package of actions “aimed at ensuring that the UK financial services sector remains at the forefront of technology, attracts investment and jobs, and expands consumer choice.”
Not wanting to get in the way of crypto development, they engage with “investors, professionals and companies involved in deFi activities, including technology and financial services companies; trade associations and representative bodies; academic institutions and think tanks; and legal, accounting and tax consultants”.
So this will be a big task and also take a lot of time. However, HMRC said it shouldn’t be more than two months. The final date for this process is August 31.
But the British government is very nuanced in its approach. This makes sense, as other countries view crypto a little more critically. HMRC said the measures also include “the intention to consider and, if necessary, address concerns raised by stakeholders about the tax treatment of DeFi loans and foreclosures.”
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