HMRC’s latest update is a sign that they’ve listened: capital gains tax will be deferred until the actual disposal, so liquidity pool players finally don’t have to calculate and pay taxes on paper unrealized gains every day—the industry’s lobbying still matters.

Wu says he learned that Aave founder Stani Kulechov stated that the UK’s Her Majesty’s Revenue and Customs (HMRC) is adopting new tax rules for crypto lending and liquidity pools. Under the new arrangement, assets deposited into lending agreements will be treated as “no gain, no loss” (NGNL), capital gains tax will be deferred until the occurrence of actual economic disposal, and the underlying collateral will also be excluded from the calculation of capital gains tax, Stani said. He said the move is mainly driven by industry feedback, to avoid imposing an excessive reporting burden on taxpayers under the current treatment.