UK Treasury seeks input on taxing DeFi staking and lending: Finance Redefined
The UK Treasury is seeking input on taxing the DeFi space, and on provisions around staking and lending.
Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.
The taxation arm of His Majesty’s Treasury in the United Kingdom has proposed new regulatory changes to simplify how DeFi returns are taxed and reduce the “administrative burden” for taxpayers.
A DeFi options protocol has raised $17 million for a buy-side marketplace and an expanded number of listed tokens. USD Coin (USDC) issuer Circle launched a cross-chain USDC transfer protocol between Ethereum and Avalanche.
Ordinals Finance, an Ethereum-based DeFi protocol, allegedly rug-pulled its users for over a million dollars and erased its presence from all social media platforms as news about the same broke out.
The top 100 DeFi tokens by market capitalization had another mixed week in terms of price action, with minimal changes over the past week.
UK Treasury seeks input on taxing DeFi staking and lending
The taxation arm of the UK Treasury is seeking input on a possible new regime for taxing DeFi. An April 27 consultation by His Majesty’s Revenue and Customs will run until June 22. It asks for “investors, professionals and firms engaged in DeFi activities” along with representative bodies and think tanks to submit their views on the government’s proposed DeFi tax treatment.
Under the proposed legislative changes, crypto used in DeFi transactions wouldn’t be treated as a disposal for the purposes of tax, which usually trigger a capital gains tax event.
DeFi options protocol raises $17M for buy-side marketplace
Thetanuts Finance, a DeFi protocol offering crypto options contracts, has raised $17 million to provide a buy-side marketplace and an expanded list of coins, according to an April 24 announcement from the team.
The team plans to employ the new funds to provide a “buy-side altcoin options market” to attract options purchasers. The announcement states that, until now, DeFi options protocols have focused on attracting sellers looking for steady income instead of options traders looking for leverage. Using the newly raised funds, the developers hope to be one of the first protocols to provide products for the buy side of the options market.
Circle launches cross-chain USDC transfer protocol for Ethereum, Avalanche
Circle, the creator of USDC, has launched a mainnet protocol that lets users transfer USDC between Ethereum and Avalanche, according to an April 26 announcement. Previously, Avalanche users holding USDC on Ethereum had to deposit their coins with a Circle partner or use a third-party bridge to transfer USDC between networks. The new cross-chain transfer protocol appears to do away with the need for USDC bridges.
The team released a video on April 13 showing how the new protocol works. Unlike a traditional bridge, it doesn’t lock tokens sent to its contract. Instead, it destroys them and issues new tokens on the receiving network. Users can directly redeem these new tokens for bank deposits by depositing them with Circle or its partners.
Ordinals Finance has conducted a $1M rug pull: CertiK
Ordinals Finance, an Ethereum-based DeFi protocol that allows users to lend and borrow inscriptions, has been accused of performing an exit scam known as a “rug pull.”
In an April 24 press release seen by Cointelegraph, blockchain security firm CertiK reported that the protocol’s developer pulled 256 million of its native OFI tokens out of its smart contracts using a “safuToken” function. Another 13 million OFI were removed through an “ownerRewithdraw” function, bringing the total number of tokens withdrawn to 269 million, CertiK stated.
DeFi market overview
DeFi’s total market value saw a minor increase this past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a mixed week, with most tokens trading in the red. The total value locked in DeFi protocols stood at just above $50 billion.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.
