The entire crypto-verse started as an entity that functioned on decentralization. However, the invasion of regulators forced the industry to roll out a new space called Decentralized Finance or DeFi to maintain the ethos of crypto. But now regulators were veering into this arena, thanks to the abrupt collapse of specific DeFi projects like Celsius. In addition to regulations, certain governments are also looking to tax the DeFi space.
Earlier today, the UK government revealed that it was looking for the opinions and views of DeFi investors, professionals, and companies in the taxation of the space. The tax of lending and staking activities involving cryptocurrencies were highlighted here.
Further elaborating on the UK government’s sudden interest in DeFi, the announcement read,
“The government is interested in ascertaining whether administrative burdens and costs could be reduced for taxpayers engaging in this activity, and whether the tax treatment can be better aligned with the underlying economics of the transactions involved.”
Those who intend to provide their opinion on the matter are given until the 31st of August 2022. Individuals would have to submit their responses through the email found in the announcement. In addition, the government would curate the responses and publish them along with their decision.
Have extensive hacks meddled with the regulatory freedom of DeFi?
The downfall of Celsius and similar crypto lending platforms could have pushed governments to pry into the world of decentralization. However, the constant hacks that the DeFi space has been hit with over the years have certainly influenced this.
Recently, German and Indian officials have expressed their concerns over the risks involved in the DeFi space.
Furthermore, the current rate at which DeFi projects assets are failing, and the hacks are speculated to prompt regulators to scrutinize the space extensively. While taxing the space undoubtedly makes projects more accountable for customer funds, it also meddles with the ethos of DeFi.