The UK’s HM Revenue & Customs has confirmed that depositing cryptoassets into DeFi lending protocols and liquidity pools will no longer count as a taxable disposal, deferring any capital gains tax until an investor makes a genuine economic disposal of the assets.
HMRC and DeFiThe measure applies "no gain, no loss" treatment to three cases: lending a single cryptoasset, borrowing one, and supplying tokens to an automated market maker, the smart-contract engine behind liquidity pools. Entering or exiting those arrangements in the same asset no longer triggers a tax event; a gain or loss arises only on a real disposal, or, in a liquidity pool, if a user withdraws more or fewer tokens than they deposited. Collateral posted to borrow against will also be disregarded for capital gains tax.
Industry inputHMRC in the UK is adopting new tax legislation related to crypto lending and liquidity pools.
Main take is that deposits into lending protocols will be treated as ‘no gain, no loss’ (NGNL), which effectively defers capital gains tax until an economic disposal. Also underlying…
The measure's final costing still needs certification by the Office for Budget Responsibility, and it will not take effect until April 2027, giving UK crypto users, and the protocols competing for them, more than a year to adjust.
