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The recent HMRC guidance on decentralised finance (DeFi) could mark a turning point for crypto lending and borrowing in the UK, according to Stani Kulechov, founder of Aave.
The clarification, which follows a multi-year consultation process, states that depositing digital assets or stablecoins such as USDC or USDT into DeFi platforms will not be treated as a taxable disposal, at the point of deposit. In other words, users who lend, stake, or borrow against their crypto holdings will not trigger a capital gains event simply by depositing their assets on DeFi platforms.
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Capital gains tax would only apply when a user genuinely disposes of their assets, by selling, converting, or otherwise cashing out, rather than simply by moving tokens into or out of a DeFi protocol. Under the new approach, these routine DeFi transactions fall under a “no gain, no loss” treatment, giving investors much clearer and more practical guidance on how their activity will be taxed.
“For users, this is significant,” Kulechov told Yahoo Finance Future Focus. “They now have more clarity over HMRC’s approach, and they can use DeFi lending protocols to borrow funds against their collateral without creating a taxable event or a disposal.”
HMRC explicitly notes that locking cryptocurrency tokens as collateral to borrow, or depositing a single token into a lending/staking arrangement, would not trigger a chargeable gain at the point of deposit under the “no gain, no loss” approach. The tax event is generally deferred until there is a genuine disposal, for example selling or exchanging the asset.
Kulechov added that this clarity could also encourage broader adoption of crypto-sector innovations among institutional investors, who have often been hesitant to engage with DeFi due to uncertainties around regulation and taxation.
“It simplifies the tax approach, which reduces the burden and allows for wider adoption by institutions, but also simplifies things for regular retail users,” he said.
Kulechov emphasised that a major part of achieving mass adoption of decentralised finance depends on simplifying the user experience. Historically, DeFi has been accessible mainly to technically savvy users familiar with blockchain wallets and exchanges.
However, Aave is seeking to bring DeFi into a consumer-friendly, mobile-first experience, allowing users to move funds from traditional bank accounts into Aave with minimal friction, while the protocol handles the technical details in the background.
“Providing a seamless mobile experience is a really big opportunity for retail users,” he said. “It makes yield generation and lending accessible to a much wider audience.”
The HMRC guidance comes at a time when many traditional savings options in the UK are becoming less attractive. The autumn budget’s decision to reduce Cash ISA allowances could push many savers to look beyond traditional products for better returns. From April 2027, the annual Cash ISA limit for under-65s will fall from £20,000 to £12,000, narrowing the scope for tax-efficient cash savings.
By contrast, DeFi platforms like Aave offer users the ability to earn consistent, uncorrelated yields on their digital assets while maintaining the flexibility to deposit or withdraw at any time, a combination that Kulechov says is increasingly appealing to savers searching for new financial opportunities.
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“What DeFi really helps with is accessing yield and financial opportunities,” Kulechov said. “Aave has been battle-tested over the past five years and shows how decentralized finance as financial infrastructure can work effectively, mitigating single points of failure through smart contracts.”
The combination of tax clarity, user-friendly interfaces, and attractive yield opportunities could accelerate DeFi adoption in the UK, according to Kulechov. Retail users, who previously may have been deterred by technical hurdles or regulatory uncertainty, now have a clear pathway to engage with crypto lending and borrowing in a safe, regulated-compliant way.
“This is really the beginning of making DeFi more accessible, more mainstream,” Kulechov said. “With the reduction of traditional savings benefits in the UK, and the ability to generate yield through platforms like Aave, we’re seeing increasing interest among everyday users who want to make their money work harder.”
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