Summary:
- The U.K. started an open consultation pertaining to decentralized finance.
- Regulations and taxation policies for lending and staking crypto assets are the main focus for now.
- Crypto firms, investors, and other stakeholders are invited to contribute to the process.
- The news come shortly after authorities published a packet of measures geared toward crypto regulations in April.
- Bank of England governor Andrew Bailey remains unconvinced about crypto.
Government authorities in the U.K. announced an open consultation aimed at possibly regularizing policies related to activities in decentralized finance (DeFi).
The call for evidence dubbed “The taxation of Decentralised Finance involving the lending and staking of crypto-assets” was published on Tuesday to this effect. According to the statement published by Her Majesty’s Revenue and Customs (HMRC), authorities are open to receiving contributions and insight from investors, professionals, and firms in the DeFi industry.
Other stakeholders including financial service firms think tanks, and tax advisory firms are also invited to the open consultation. The HMRC hopes that over an eight-week period, these key players will help shape the U.K. regulatory approach to taxation as regards crypto-asset loans and staking in DeFi, per Tuesday’s publication.
Authorities in the U.K. define DeFi lending as financial services that reward users who deposit their crypto assets or tokens into a pool in a bid to earn passive income or yield over a period of time.
The HMRC also stressed that the call for evidence is designed to determine if existing policies are best suited for the DeFi ecosystem in the U.K.
In particular, the government is interested in ascertaining whether administrative burdens and costs could be reduced for taxpayers engaging in this activity and whether the tax treatment can be better aligned with the underlying economics of the transactions involved.
U.K. DeFi Consultation Follows Crypto Regulatory Package
The latest regulatory move from the U.K. comes a few months after the Chancellor of the Exchequer Rishi Sunak, announced a package of measures aimed at standardizing crypto in the country.
As EthereumWorldNews reported, the package planned to approve major stablecoins as payment methods and support growth in the digital asset ecosystem.
Notably, recent rhetoric from the Bank of England remains skeptical about the role of crypto in Britain’s financial system. Governor Andrew Bailey said that cryptos have “no intrinsic value” following the market slump in June 2022.