The UK Treasury's tax arm, HM Revenue and Customs (HMRC), is seeking input on a possible new regime for the tax treatment of lending and borrowing on decentralized finance (DeFi) protocols. The proposed legislative changes would mean that crypto used in DeFi transactions would not be treated as a disposal for the purposes of tax, which usually triggers a Capital Gains Tax (CGT) event. Instead, CGT would apply when cryptocurrencies are disposed of in a non-DeFi transaction. The consultation seeks to establish a framework that better aligns the taxation of cryptocurrency assets used in DeFi lending and staking transactions while making it easier for users to comply with regulations. The consultation is the second stage of a five-step process, which will be followed by drafting legislation, implementing and monitoring, and ultimately, reviewing and evaluating the change. The British government took the first step in the process in July 2022 by soliciting feedback on the taxation of crypto asset loans and staking within the context of DeFi. (Cointelegraph)