British government wants to regulate ‘strike’ and borrowing within De-Fi

Last Updated: 7 July 2022

More and more countries are finding it necessary to regulate crypto. For many investors, this is a blockade, as some countries are pulling hard on the reins. The UK is taking a lead by creating a tax system with input from those directly affected.

A call for evidence

The government has requested a ‘call for evidence’ as it looks for methods to regulate and possibly tax crypto within Decentralised Finance (De-Fi). Whether this tax will be positive or negative will depend on the findings of this call.

The initiative comes from the tax authority of the UK government called ‘Her Majesty’s Revenue and Customs (HMRC).’ You would think that crypto investors should be afraid of the UK tax authorities, but the call shows that this is not so bad:

“The Government is particularly interested in whether the administrative burden and costs can be reduced for taxpayers engaged in this activity and whether the tax treatment can be better aligned with the underlying economics of the transactions involved,” the call reads.

The whole De-Fi angle is being questioned

In April, the UK announced a package of measures “designed to ensure that the UK’s financial services sector remains at the forefront of technology, attracts investment and jobs, and broadens consumer choice.”

Not wanting to stand in the way of crypto developments, they are therefore engaging with “investors, professionals, and companies involved in theFi business, including technology and financial services firms; trade associations and representative bodies; academic institutions and think tanks; and legal, accountancy and tax advisory firms.”

So this is going to be a big task and take a lot of time too. However, HMRC says it should not take more than two months. In fact, the end date for this process is 31 August.

Critical note

Still, the British government is very nuanced in its approach. This is logical since other countries take a more critical view of crypto. HMRC stated that the measures also include “an intention to consider and, where appropriate, address concerns raised by stakeholders about the tax treatment of DeFi loans and strike.”

  • Florian Feidenfelder

    Florian Feidenfelder is a seasoned cryptocurrency trader and technical analyst with over 10 years of hands-on experience analyzing and investing in digital asset markets. After obtaining his bachelor's degree in Finance from the London School of Economics, he worked for major investment banks like JP Morgan, helping build trading systems and risk models for blockchain assets.

    Florian later founded Crypto Insights, a leading research firm providing actionable intelligence on crypto investments to hedge funds and family offices worldwide. He is the author of the bestseller "Mastering Bitcoin Trading" and has been featured in prominent publications like the Wall Street Journal, Bloomberg, and Barron's for his insights on blockchain technologies.

    With extensive knowledge spanning the early days of Bitcoin to today's explosive DeFi landscape, Florian lends his real-world expertise to guide both new entrants and seasoned professionals in capitalizing on the wealth-creating potential of crypto trading while effectively managing its inherent volatility risks.

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