The recent HMRC guidance on decentralised finance (DeFi) could mark a turning point for crypto lending and borrowing in the UK, according to Stani Kulechov, founder of Aave.
The clarification, which follows a multi-year consultation process, states that depositing digital assets or stablecoins such as USDC or USDT into DeFi platforms will not be treated as a taxable disposal, at the point of deposit. In other words, users who lend, stake, or borrow against their crypto holdings will not trigger a capital gains event simply by depositing their assets on DeFi platforms.
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Capital gains tax would only apply when a user genuinely disposes of their assets, by selling, converting, or otherwise cashing out, rather than simply by moving tokens into or out of a DeFi protocol. Under the new approach, these routine DeFi transactions fall under a “no gain, no loss” treatment, giving investors much clearer and more practical guidance on how their activity will be taxed.
“For users, this is significant,” Kulechov told Yahoo Finance Future Focus. “They now have more clarity over HMRC’s approach, and they can use DeFi lending protocols to borrow funds against their collateral without creating a taxable event or a disposal.”
HMRC explicitly notes that locking cryptocurrency tokens as collateral to borrow, or depositing a single token into a lending/staking arrangement, would not trigger a chargeable gain at the point of deposit under the “no gain, no loss” approach. The tax event is generally deferred until there is a genuine disposal, for example selling or exchanging the asset.
Kulechov added that this clarity could also encourage broader adoption of crypto-sector innovations among institutional investors, who have often been hesitant to engage with DeFi due to uncertainties around regulation and taxation.
“It simplifies the tax approach, which reduces the burden and allows for wider adoption by institutions, but also simplifies things for regular retail users,” he said.
Kulechov emphasised that a major part of achieving mass adoption of decentralised finance depends on simplifying the user experience. Historically, DeFi has been accessible mainly to technically savvy users familiar with blockchain wallets and exchanges.
However, Aave is seeking to bring DeFi into a consumer-friendly, mobile-first experience, allowing users to move funds from traditional bank accounts into Aave with minimal friction, while the protocol handles the technical details in the background.