UK Treasury Consults Public on Taxation of DeFi Staking and Lending: Analysis by Finance Redefined for Enhanced Financial Insights

UK Treasury Seeks Input on Taxing DeFi Staking and Lending

The UK Treasury is seeking input on taxing the DeFi space, and on provisions around staking and lending. His Majesty’s Revenue and Customs proposed new regulatory changes to simplify how DeFi returns are taxed, and reduce the administrative burden for taxpayers.

An April 27 consultation by the taxation arm of the UK Treasury will run until June 22. The government wants investors, professionals, and firms engaged in DeFi activities to submit their views on the proposed DeFi tax treatment. Under the proposed legislative changes, crypto used in DeFi transactions will not be treated as a disposal for the purposes of tax, which usually triggers a capital gains tax event.

DeFi Options Protocol Raises $17M for Buy-Side Marketplace

Thetanuts Finance, a DeFi protocol offering crypto options contracts, has raised $17 million to provide a buy-side marketplace and an expanded list of coins. The team plans to employ the new funds to provide a “buy-side altcoin options market” to attract options purchasers. DeFi options protocols have typically focused on attracting sellers looking for steady income instead of options traders looking for leverage. The developers hope to be one of the first protocols to provide products for the buy side of the options market.

Circle Launches Cross-Chain USDC Transfer Protocol for Ethereum, Avalanche

Circle, the creator of USDC, has launched a mainnet protocol that lets users transfer USDC between Ethereum and Avalanche. Previously, Avalanche users holding USDC on Ethereum had to deposit their coins with a Circle partner or use a third-party bridge to transfer USDC between networks. The new cross-chain transfer protocol appears to do away with the need for USDC bridges.

The team released a video on April 13 showing how the new protocol works. Unlike a traditional bridge, it doesn’t lock tokens sent to its contract. Instead, it destroys them and issues new tokens on the receiving network. Users can directly redeem these new tokens for bank deposits by depositing them with Circle or its partners.

Ordinals Finance Allegedly Rug-Pulls its Users for Over $1M

Ordinals Finance, an Ethereum-based DeFi protocol that allows users to lend and borrow inscriptions, has been accused of performing an exit scam known as a “rug pull”. In an April 24 press release, blockchain security firm CertiK reported that the protocol’s developer pulled 256 million of its native OFI tokens out of its smart contracts using a “safuToken” function. Another 13 million OFI were removed through an “ownerRewithdraw” function, bringing the total number of tokens withdrawn to 269 million.

DeFi Market Overview

DeFi’s total market value saw a minor increase this past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a mixed week, with most tokens trading in the red. The total value locked in DeFi protocols stood at just above $50 billion.