The U.K. government is considering a new tax framework for decentralized finance (DeFi) users, signaling support for a “no gain, no loss” approach to crypto lending and liquidity pools. This could defer capital gains tax until assets are actually sold or traded. Major DeFi platform Aave CEO praised the move as a win for U.K. users.

The proposal aims to align tax rules with how DeFi operates, reducing administrative burdens and reflecting economic reality. It would also apply to complex multi-token arrangements within decentralized protocols, taxing gains if users receive more tokens back than deposited. The government is consulting with industry players to refine the rules.

Although the new approach is supported by many, some caution that alternative models could increase complexity, especially for retail users. Clear definitions and consistency with other jurisdictions’ treatment of crypto assets are emphasized. Despite the changes, DeFi activities in the U.K., such as converting ETH to WETH and liquidating gains, will still incur taxes.

Read more at Yahoo Finance: UK Proposes ‘No Gain, No Loss’ Tax Rule for DeFi in ‘Major Win’ for Users