CryptoUK’s response to HMRC’s call for evidence on the taxation of stablecoins
On 26 March 2026, HM Revenue & Customs (HMRC) published a call for evidence on the taxation of stablecoins, seeking industry feedback on whether the UK’s existing tax framework is fit for purpose as stablecoins become more widely used for payments, savings, treasury management, and DeFi activity. The consultation focuses on how stablecoins are currently treated under Capital Gains Tax (CGT), Income Tax, and Corporation Tax, and whether reforms are needed to better reflect their economic function as payment and settlement instruments rather than speculative assets.
A major concern raised in the paper is that the current tax treatment can create a disproportionate compliance burden. Under existing rules, every disposal of a stablecoin triggers a taxable event, even where there is no economic gain. HMRC is therefore exploring whether qualifying stablecoins should receive different treatment, particularly for routine payment activity, and whether interest-like returns generated from stablecoins should be taxed differently. The consultation also examines how stablecoins are treated by companies, including whether they should fall within existing loan relationship rules, as well as how any reforms would interact with DeFi lending and liquidity pools.
In our response, we argue that tax treatment should follow the economic substance of stablecoins rather than the technology used to deliver them. The submission stresses that stablecoins are primarily used for payments, treasury management, and settlement, not capital appreciation, meaning the current CGT framework creates unnecessary friction for both consumers and businesses.
Key recommendations include:
- Introducing a transaction-level “no gain/no loss” CGT treatment for qualifying stablecoins, so that routine use does not create taxable disposal events.
- Extending any reforms to non-sterling stablecoins such as USDC and USDT, which dominate global stablecoin activity.
- Retaining the current miscellaneous income treatment for individuals receiving stablecoin yield, but moving to a receipt-based timing approach to reduce FX-related complications.
- Creating a statutory deeming provision so that qualifying stablecoins held by companies are treated within the Corporation Tax loan relationship framework, aligning them more closely with fiat currency treatment.
- Ensuring tax reforms remain compatible with DeFi lending and liquidity pool arrangements through a basis “flow-through” approach.
- Establishing a clear HMRC-published list of qualifying stablecoins to reduce uncertainty for taxpayers and advisers.
Our response also highlights concerns that the current framework is already discouraging legitimate retail and business adoption of stablecoins in the UK, particularly for cross-border payments and operational treasury use.
