UK authorities have invited the public to discuss the possibility of taxing staking and crypto loans in the context of decentralized finance.

The UK government is seeking advice on taxation and ‘staking’ of crypto-asset loans in the context of Decentralized Finance (DeFi). https://t.co/qjrh2wq3XV

— Wu Blockchain (@WuBlockchain) July 5, 2022

The UK Revenue Service (HMRC) is investigating whether there is potential for cost savings for taxpayers participating in an emerging industry. The department is also concerned with aligning the tax regime with the basic transaction economy.

HMRC will gather input from investors, professionals and organizations involved in DeFi-related activities. The service includes technology and finance companies, trade associations, educational institutions and think tanks, as well as law and consulting firms in the field of accounting and taxation.

Based on the results of the public consultations, which will run until 31 August, HMRC will issue a report detailing next steps.

On July 5, the FCA appointed Matthew Long, director of the interagency National Economic Crime Enforcement Administration (NECC), to head the Department of Payments and Digital Assets. The official will oversee the electronic money and cryptocurrency markets and lead the development of relevant policies.

Also today, the Bank of England announced the importance of monitoring the digital asset market in a financial stability report. It has become less of a threat, officials said, in light of its capitalization tripling to $1 trillion. The regulator has called for strengthening the regulatory and enforcement base of the cryptocurrency space.

Recall that in March 2022, the regulator published the framework principles for establishing a regulatory framework for cryptocurrencies with an emphasis on future risks to financial stability.

In April, the Office of Prudential Regulation increased the budget for the upcoming fiscal year to combat the risks associated with digital assets.

The Treasury has announced its intention to include the regulation of stablecoins, excluding algorithmic ones, as a payment mechanism in the Financial Services and Markets Act.

Earlier, UK Minister for Digital, Culture, Media and Sport Chris Philp announced plans to transform the country into a “crypto centre”.

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