Aave Labs Hails UK HMRC’s ‘No Gain, No Loss’ Approach to DeFi Taxation
The decentralised finance space in the United Kingdom is poised to experience a major shift as HM Revenue & Customs (HMRC) has published the consultation outcome on the taxation of DeFi activities related to lending and staking. Aave Labs founder Stani Kulechov took to the X platform to express his enthusiasm and support for the latest move of the UK’s tax, payments and customs authority.
This phenomenal move marks a significant milestone for the DeFi industry, providing much-needed clarity and certainty for users and protocols alike. At the heart of this development is a crucial conclusion that is set to have far-reaching implications.
According to new guidelines, deposits of assets into protocols like Aave will not be treated as a disposal for capital gains tax purposes, effectively creating a “no gain, no loss” approach. This development marks a significant shift in HMRC’s approach to DeFi taxation, one that recognizes the unique characteristics of these transactions and provides a more favourable environment for users to access liquidity and leverage their assets.
Aave Labs Founder Responds to HMRC’s DeFi Taxation Consultation
In a recent X post, Aave Founder and CEO Stani Kulechov shared his enthusiasm for the recent development within the UK DeFi space. The HMRC has published its consultation outcome on DeFi taxation, which reveals a ‘no gain, no loss’ approach adopted for lending and staking activities.
HMRC has published its consultation outcome in the UK regarding the taxation of DeFi activities related to lending and staking.
A particularly interesting conclusion is that when users deposit assets into Aave, the deposit itself is not treated as a disposal for capital gains…
— Stani.eth (@StaniKulechov) November 27, 2025
Notably, Kulechov identifies this development as a big win for the UK DeFi space. Specifically, deposits into blockchains such as Aave Labs won’t be treated as a disposal for capital gains tax purposes. This is a significant victory for UK DeFi users who borrow stablecoins against their crypto collateral. The Aave Labs Founder noted,
“This is a major win for UK DeFi users who want to borrow stablecoins against their crypto collateral. I’m proud that our team at Aave Labs participated in the consultation, advocating for DeFi and ensuring that the tax treatment of interactions with lending protocols reflects the economic reality: users are not intending to dispose of their assets when borrowing against their collateral for liquidity needs.”
He further expressed pride in Aave Labs’ participation in the consultation, advocating for a tax treatment that reflects the economic reality of DeFi transactions. He added that they were pleased HMRC had recognized the nuances of lending protocols and looked forward to seeing these changes reflected in UK tax legislation soon. He added, “We’re fully supportive of this approach and hope to see these changes reflected in UK tax legislation soon.”
Explaining HMRC’s Efforts to Clarify DeFi Tax Rules
In 2022, HMRC published guidance on the tax treatment of crypto asset loans and liquidity pool arrangements, but stakeholders raised concerns about disproportionate administrative burdens. To address these concerns, the government ran a Call for Evidence from July 5, 2022, to August 31, 2022, seeking views on the taxation of crypto asset loans and liquidity pools.
The Call for Evidence explored three potential options for reform. Firstly, extending the existing repo and stock lending regimes to crypto; secondly, creating separate rules for crypto asset loans and liquidity pools that mirror the principles of repos and stock lending; and thirdly, introducing new rules based on the ‘no gain, no loss’ principle, which would defer tax liability until tokens are economically disposed of.
Most respondents supported changing the tax rules, with Options 2 and 3 being the most popular. In response, the government acknowledged that the crypto market is still evolving and any tax changes must balance fostering innovation and growth with protecting the tax system’s integrity and preventing avoidance opportunities. Thus, the government unveiled the latest decision to ensure that any rules are practical and effective for users.
