The Revenue and Customs (HMRC) is seeking to find possibilities to interfere in the Decentralized finance (Defi) industry in a manner to make it more responsible & better for the participants.
Decentralized finance, or say Defi, is a decentralized protocol. Every Defi protocol is built & works on top-class blockchain networks. In the Defi platforms, any person can participate as an investor via a liquidity pool, and also lending & borrowing remains very easy on behalf of the holding assets on the platform. In short, we can say that Defi platform is a type of bank, where people don’t need to provide any kind of KYC details and also doesn’t require any documentation work.
On 5 July, Her Majesty’s Revenue and Customs (HMRC) issued a notification to explain its intention to bring a study on Defi, in order to bring “The taxation of Decentralised Finance involving the lending and staking of crypto-assets”.
Agency is trying to figure out the possible ways to regulate the participants in Defi platforms, and whether the hassles and costs may be reduced for taxpayers who participate in the emerging industry.
HMRC will get input from investors, professionals, and organizations, which are associated or linked with the Defi services as a participant.
Now all interested Defi participants have time until 31 August 2022, to provide their input on Defi via email to the agency.
After getting input from Defi participants, HMRC will further publish its summary as a response to this matter, which will give hints, whether the agency will take any suitable steps regarding this innovative industry or not.
Earlier in April, the UK government published its plans to make the UK a hub of “global crypto powerhouse”. In May, the government issued an order to discuss those cases, where stablecoins issuer companies failed. For the same, there was a suggestion for the Bank of England to appoint administrators to manage the situation.