Draft measures covering cryptoasset loans, liquidity pools, eligible stablecoins, and HMRC’s information powers remain open for technical consultation until 7 September 2026.
TL;DR
- On 13 July 2026, the UK government published draft legislation for three cryptoasset tax measures as part of its 2026 Legislation Day.
- Certain qualifying cryptoasset lending and liquidity-pool transactions could receive no-gain, no-loss treatment, deferring Capital Gains Tax until an economic disposal occurs.
- Disposals of eligible stablecoins could be exempt from Capital Gains Tax for individuals and trustees, while certain company transactions would be taxed based on the amounts recognised in their accounts.
- The proposed relief is targeted and conditional. It would not eliminate every taxable event created by the technical movement of cryptoassets.
- HMRC is also proposing to expand its Financial Institution Notice powers to certain providers of cryptoasset-related services.
- The measures remain in draft form and are open for technical consultation until 7 September 2026.
What Has Been Published
On 13 July 2026, as part of the government’s 2026 Legislation Day, HMRC published draft legislation and supporting materials for three cryptoasset tax measures.
Taken together, HMRC describes them as the government’s most substantial package of cryptoasset tax reforms to date.
The proposals cover:
- Cryptoasset loans and liquidity pools
- The taxation of eligible stablecoins
- HMRC’s civil tax information and inspection powers
The measures are intended for inclusion in Finance Bill 2026–27.
The stablecoin and cryptoasset-arrangement provisions are proposed to take effect from April 2027. The changes to HMRC’s information powers would take effect on and after Royal Assent.
All three measures remain in draft form and are open for an eight-week technical consultation closing on 7 September 2026. The final provisions may change through the consultation and legislative process.
Cryptoasset Loans and Liquidity Pools
The first measure is intended to align the tax treatment of certain cryptoasset lending and liquidity-pool arrangements more closely with their economic substance.
Under the current approach, transferring a cryptoasset into a lending arrangement or liquidity pool may constitute a disposal for Capital Gains Tax purposes, even where the participant has not meaningfully exited their economic position.
This can create tax calculations and recordkeeping requirements based on the technical mechanics of a transaction rather than a realised economic gain or loss.
The draft legislation proposes different treatments for three defined types of arrangement.
Single Cryptoasset Lending Arrangements
Where a qualifying arrangement is economically equivalent to a loan, the transfer of cryptoassets in exchange for an interest in that arrangement may receive no-gain, no-loss treatment.
This would generally defer recognition of the gain or loss until a later economic disposal occurs.
The treatment would not apply automatically to every cryptoasset lending product. The draft includes conditions relating to the commercial nature of the arrangement, the risk of loss, the relationship between the parties, and whether the arrangement is widely available.
Single Cryptoasset Borrowing Arrangements
Borrowing would receive a separate treatment.
A borrower would generally be treated as acquiring the borrowed cryptoassets at market value when they are received. When cryptoassets of the same type are returned, the borrower would be treated as disposing of them for the original acquisition value.
Collateral would generally be disregarded for Capital Gains Tax purposes unless it becomes apparent that it will not be returned.
Automated Market-Making Arrangements
For qualifying automated market-making arrangements operated through smart contracts, contributing cryptoassets in exchange for an interest in a liquidity pool may receive no-gain, no-loss treatment.
When assets are withdrawn, that treatment would apply to the extent that the participant receives cryptoassets of the same type and quantity as those originally contributed. Differences in the quantity received may still produce a gain or loss.
The proposed treatment is targeted rather than comprehensive. It applies only where the assets and arrangements satisfy the statutory conditions.
HMRC estimates that the measure will affect approximately 700,000 individuals engaging in cryptoasset lending and liquidity-pool transactions. It is proposed to take effect from 6 April 2027.
Taxation of Eligible Stablecoins
The second measure would treat eligible stablecoins more like money for certain tax purposes.
For individuals and trustees:
- Disposals of eligible stablecoins would be exempt from Capital Gains Tax.
- Certain interest-like returns involving eligible stablecoins would be taxed as savings income.
For companies, eligible stablecoins and certain related debts and lending arrangements would be brought within the Corporation Tax loan-relationship rules. The tax treatment would therefore follow more closely the amounts recognised in the company’s accounts.
The definition of an eligible stablecoin is important.
Broadly, it must be reasonable to assume that:
- Sufficient currency or other reserve assets are held to support its stable value relative to sterling or another currency.
- The cryptoasset is designed to be used as a means of payment or settlement.
- The asset is widely available to independent market participants.
- It is, or is expected to be, traded with sufficient frequency and volume to constitute an active market.
Cryptoassets of the same type could not themselves be counted as the assets supporting the stable value.
The exemption would therefore not apply to every asset described or marketed as a stablecoin.
Institutions and taxpayers may need to assess an asset’s reserves, design, use, availability, and market activity to determine whether it satisfies the final definition.
The draft also links eligibility to a specified “relevant day,” generally connected to when the asset was acquired. This means that eligibility may need to be established and preserved historically rather than assessed only when an asset is disposed of.
For individuals and trustees, the measure is proposed to take effect from 6 April 2027. For companies, it would generally apply to accounting periods beginning on or after 1 April 2027.
HMRC estimates that approximately 1.2 million individuals engaging in stablecoin transactions could be affected.
Proposed Changes to HMRC’s Information Powers
The third measure would expand HMRC’s Financial Institution Notice, or FIN, to include certain providers of cryptoasset-related services.
The proposals would also update the treatment of digital records. Where HMRC already has a lawful basis to request information, that request could extend to relevant information held in software, automated systems, cloud-based services, and other digital environments.
This may include information needed to understand how relevant tax figures were produced.
The proposals would broaden the range of organisations and digital information that may fall within HMRC’s existing information framework.
These provisions are also in draft form and remain open to technical consultation.
Scope of the Draft Proposals
The stablecoin, lending, and liquidity-pool proposals seek to bring the tax treatment of certain digital-asset transactions closer to their underlying economic substance.
The measures are targeted. They introduce specific treatments for defined assets and arrangements rather than a general rule deferring gains and losses across all cryptoasset activity until conversion into fiat currency or another clearly defined economic disposal.
A broader realisation-based approach has also been raised in industry discussions as one possible way to reduce taxable events arising solely from movements between wallets, protocols, liquidity pools, and other digital-asset arrangements.
The current draft does not adopt that broader model. Instead, it introduces individual rules with detailed eligibility conditions.
The proposals may therefore change the treatment of certain transactions while other forms of digital-asset activity remain outside their scope. The consultation provides an opportunity for affected parties to consider whether the proposed definitions, conditions, and practical operation are sufficiently clear before the legislation is finalised.
What Institutions Should Consider
The immediate priority is to understand the proposals without treating them as final law.
Institutions, taxpayers, advisers, software providers, and other market participants may wish to consider:
- Whether the stablecoin definition will operate effectively across real-world assets and business models
- Whether the lending and automated market-making conditions cover the arrangements they are intended to address
- Which economically neutral transactions would remain taxable under the proposed framework
- Whether the transitional provisions are clear and operationally workable
- Whether the proposed information powers are appropriately defined and proportionate
- What records, classifications, valuations, and cost-basis information would be needed to apply the rules consistently
The consultation period provides an opportunity for affected parties to raise these issues before the legislation is finalised.
Lukka’s Engagement in the Policy Process
Effective digital-asset policy depends on understanding how transactions operate economically and commercially, not only how they appear technically on a blockchain.
Lukka has participated in the policy consultation process, sharing technical and commercial perspectives on the practical operation of digital-asset markets and tax reporting.
The proposed treatment of eligible stablecoins, lending, and liquidity-pool arrangements reflects an effort to align aspects of cryptoasset taxation more closely with the economic substance of the underlying activity. Because the measures remain in draft form, the consultation provides an important opportunity to consider their scope, practical implementation, and treatment of activity that falls outside the defined arrangements.
We encourage affected taxpayers, financial institutions, advisers, software providers, cryptoasset service providers, trade associations, and other market participants to review the proposals and contribute their perspectives.
Constructive industry input can help ensure that the final rules are clear, proportionate, operationally workable, and informed by how digital-asset markets function in practice.
The technical consultation closes on 7 September 2026. Feedback on the cryptoasset tax measures may be submitted to [email protected]. Comments specifically concerning the information-powers proposals may be submitted to [email protected].
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About Lukka
Founded in 2014, Lukka provides enterprise blockchain data and software solutions to financial institutions, exchanges, fund administrators, and government agencies. Its platform transforms raw on- and off-chain activity into audit-ready intelligence–powering accounting, compliance, risk, and reporting workflows across the digital-asset ecosystem.
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Official Sources
Finance Bill 2026–27 — Draft Legislation and Technical Tax Documents
Cryptoasset Loans and Liquidity Pools
Tax Treatment of Stablecoins
Reforming Information Powers and Modernising Computer Records Law
Taxation of Stablecoins — Call for Evidence Outcome
The Taxation of Decentralised Finance Involving the Lending and Staking of Cryptoassets — Summary of Responses
Disclaimer
The measures described in this article remain in draft form and are subject to technical consultation and the legislative process. Definitions, conditions, and requirements may change before the legislation is finalised. This article is for informational purposes only and does not constitute tax, legal, or accounting advice.