UK Considers New Tax Framework for DeFi Assets

Key Points:

UK plans deferral of tax liabilities for DeFi deposits.
Proposed by HM Revenue and Customs.
Impact on ETH and ERC-20 tokens in DeFi protocols.

The UK government, through HM Revenue and Customs, is proposing a new tax framework for DeFi users, affecting cryptocurrency lending and liquidity pools, as reported on November 28th.

This proposal could reduce upfront tax burdens for DeFi users in the UK, aligning tax rules with DeFi operations and simplifying compliance.

UK’s ‘No Profit, No Loss’ Principle for Crypto Lending

HM Revenue and Customs has released proposals supporting a “no profit, no loss” principle for crypto lending and liquidity pools. The new tax framework discourages tax on routine DeFi interactions, impacting tokens like Ethereum. HMRC cryptoassets manual detailing guidelines and regulations aims to reduce administrative burdens by aligning with DeFi operations.

These changes mean users will pay taxes only when they trade or sell assets for a profit. The proposal has been a relief for DeFi users as they avoid immediate tax liabilities. HM Revenue and Customs continues to consult industry experts to finalize the framework. Market participants have responded positively, viewing it as a step forward. Industry experts appreciate the effort to align tax laws with DeFi activities.

Ethereum’s Market Position and Global Tax Implications

Did you know? This proposal could set a global precedent in crypto tax policy, offering a balanced approach amid growing industry complexity.

As of November 27, 2025, Ethereum, a key token in DeFi, trades at $3,015.51 with a market cap of 363.96 billion USD, holding an 11.69% market dominance as per CoinMarketCap. Recent months have seen Ethereum’s price fluctuating, showing a 6.30% rise in seven days despite a 31.00% decline over 90 days. Current developments in the UK may further influence its market trajectory.

Ethereum(ETH), daily chart, screenshot on CoinMarketCap at 23:51 UTC on November 27, 2025. Source: CoinMarketCap

According to Coincu research, this proposal could set a global precedent in crypto tax policy, offering a balanced approach amid growing industry complexity. DeFi’s evolving nature requires forward-thinking in regulation, possibly leading to more aligned international tax standards. Bold moves like these can attract additional investments and innovation in the sector.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Source: https://coincu.com/news/uk-defi-tax-framework-proposal/

Highlights: US prosecutors requested a 12-year prison sentence for Do Kwon after the Terra collapse. Terraform’s $40 billion downfall caused huge losses and sparked a long downturn in crypto markets. Do Kwon will face sentencing on December 11 and must give up $19 million in earnings. US prosecutors have asked a judge to give Do Kwon, Terraform Labs co-founder, a 12-year prison sentence for his role in the remarkable $40 billion collapse of the Terra and Luna tokens. The request also seeks to finalize taking away Kwon’s criminal earnings. The court filing came in New York’s Southern District on Thursday. This is about four months after Kwon admitted guilt on two charges: wire fraud and conspiracy to defraud. Prosecutors said Kwon caused more losses than Samuel Bankman-Fried, Alexander Mashinsky, and Karl Sebastian Greenwood combined. U.S. prosecutors have asked a New York federal judge to sentence Terraform Labs co-founder Do Kwon to 12 years in prison, calling his role in the 2022 TerraUSD collapse a “colossal” fraud that triggered broader crypto-market failures, including the downfall of FTX. Sentencing is… — Wu Blockchain (@WuBlockchain) December 5, 2025 Terraform Collapse Shakes Crypto Market Authorities explained that Terraform’s collapse affected the entire crypto market. They said it helped trigger what is now called the ‘Crypto Winter.’ The filing stressed that Kwon’s conduct harmed many investors and the broader crypto world. On Thursday, prosecutors said Kwon must give up just over $19 million. They added that they will not ask for any additional restitution. They said: “The cost and time associated with calculating each investor-victim’s loss, determining whether the victim has already been compensated through the pending bankruptcy, and then paying out a percentage of the victim’s losses, will delay payment and diminish the amount of money ultimately paid to victims.” Authorities will sentence Do Kwon on December 11. They charged him in March 2023 with multiple crimes, including securities fraud, market manipulation, money laundering, and wire fraud. All connections are tied to his role at Terraform. After Terra fell in 2022, authorities lost track of Kwon until they arrested him in Montenegro on unrelated charges and sent him to the U.S. Do Kwon’s Legal Case and Sentencing In April last year, a jury ruled that both Terraform and Kwon committed civil fraud. They found the company and its co-founder misled investors about how the business operated and its finances. Jay Clayton, U.S. Attorney for the Southern District of New York, submitted the sentencing request in November. TERRA STATEMENT: “We are very disappointed with the verdict, which we do not believe is supported by the evidence. We continue to maintain that the SEC does not have the legal authority to bring this case at all, and we are carefully weighing our options and next steps.” — Zack Guzmán (@zGuz) April 5, 2024 The news of Kwon’s sentencing caused Terraform’s token, LUNA, to jump over 40% in one day, from $0.07 to $0.10. Still, this rise remains small compared to its all-time high of more than $19, which the ecosystem reached before collapsing in May 2022. In a November court filing, Do Kwon’s lawyers asked for a maximum five-year sentence. They argued for a shorter term partly because he could face up to 40 years in prison in South Korea, where prosecutors are also pursuing a case against him. The legal team added that even if Kwon serves time in the U.S., he would not be released freely. He would be moved from prison to an immigration detention center and then sent to Seoul to face pretrial detention for his South Korea charges. eToro Platform Best Crypto Exchange Over 90 top cryptos to trade Regulated by top-tier entities User-friendly trading app 30+ million users 9.9 Visit eToro eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.

UK Considers New Tax Framework for DeFi Assets

UK’s ‘No Profit, No Loss’ Principle for Crypto Lending

Ethereum’s Market Position and Global Tax Implications

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