Today we submitted our response to HMRC's Call for Evidence on the Taxation of Stablecoins, jointly with five UK tax practices: Wright Vigar, Knightbridge Tax, Andersen LLP, Cryptax, and Myna L2. Between us, the coalition advises thousands of UK cryptoasset users, founders, exchanges, and corporates.
We could have written a one-liner: "Make stablecoins exempt from CGT and call it a day." It would have been popular. It would also have been the wrong answer.
Why exemption breaks
Exemption sounds simple. In DeFi it isn't. Every time a user deposits USDC into Aave, swaps it on Curve, or supplies it to a liquidity pool, the rules have to decide whether the token coming back is the same exempt USDC or something different. Draw the line too narrowly and you create a moat for incumbents. Draw it too broadly and you kill loss relief. Draw it too loosely and you invite structuring. Get it exactly right and the same compliance burden the reform was meant to remove returns through the side door.
Our answer: No Gain, No Loss
We proposed a third option HMRC hadn't listed: No Gain, No Loss (NGNL). It achieves the same practical outcome as exemption (no tax on everyday spending) but preserves base cost, keeps loss relief intact, and works across stablecoins, lending, and liquidity pools using one framework.
There's a precedent worth pointing to. Section 269 TCGA 1992 already exempts foreign currency held by an individual for personal use abroad from CGT. NGNL extends the same intent into digital form, without forcing HMRC to patch sections 251, 252, or 269 on a case-by-case basis.
By the numbers
- $321 billion in stablecoin market cap as of May 2026 (DefiLlama), up roughly 50% in twelve months.
- $27 trillion of stablecoin settlement value in 2024 (DL News), comparable in scale to major card networks.
- Roughly half of stablecoin supply sits in DeFi protocols (about $146bn of $167bn total DeFi TVL).
- Over 99.4% of the market is USD-pegged. No GBP-denominated stablecoin has meaningful liquidity. A sterling-only reform would apply to almost no real-world activity.
Our four recommendations
- Adopt a No Gain, No Loss framework for individuals. Build on the Asset Composition NGNL framework we set out in our June 2023 DeFi consultation response, with built-in anti-avoidance design.
- Legislate stablecoin and DeFi NGNL reforms together. In a single Finance Bill, applying to individuals and corporates from day one.
- Use the regulatory definition of qualifying stablecoin as the tax scope. Don't add a narrower tax-specific bar that would create a moat for incumbents.
- For corporates, bring qualifying stablecoins within Part 5 CTA 2009. Adopt the section 303(3) instrument issuance fix and treat stablecoin lending as a transaction for the lending of money.
Why now
CARF reporting went live on 1 January 2026. HMRC's visibility of UK stablecoin activity is about to step-change. The window to get the framework right is open now, before legislation is drafted, before case law and practice set hard-to-reverse precedent, and before users get caught between a payments-only reform that doesn't reach DeFi and a DeFi regime that's still years away. We'd rather spend the consultation period debating the right framework than spend the next decade unpicking the wrong one.
The full response is available here:
