Taxation of stablecoin: call for evidence

The government has published a Call for Evidence on the tax treatment of stablecoin. Stablecoin are currently treated in the same way as other cryptoassets for tax purposes. However, with their potential to play a more significant role in both wholesale and retail payments in the future, the government is considering whether this treatment is appropriate going forwards, and whether it should be considering making changes.

Background

In July 2025, the government set out its vision for the financial services sector in its Financial Services Growth and Competitiveness Strategy. This includes taking forward work in relation to developments like tokenised payment instruments (such as stablecoins).

Stablecoins are a type of cryptoasset that seek to maintain a stable value by:

• referencing another asset, for example a fiat currency or a commodity (such as gold)
• holding a reserve of backing assets.

Stablecoins may differ significantly across issuers, however the consultation notes that most stablecoins in the market reference a single fiat currency and are designed so that the stablecoin's value is supported by backing assets. In addition, stablecoins are often structured with an expectation of redemption at par value for eligible holders.

The government considers that whilst stablecoins have predominantly been used for buying into and selling out of more volatile cryptoassets and de-fi applications to date, as regulations develop and the market evolves, stablecoins are expected to become increasingly significant in traditional finance and form a key part of the future payments ecosystem. In this context, a new financial services regulatory regime for cryptoassets is expected to come into effect in late 2027. This new regulatory regime introduces the concept of 'qualifying stablecoin', which is defined as a stablecoin that references a particular fiat currency and seeks to maintain a stable value by holding backing assets.

Call for evidence

The consultation notes that there is a strong potential use case for stablecoins in retail and wholesale payments, given their price stability. As such, stablecoin may have features which differentiate it from other forms of cryptoassets and which may justify a tax treatment that diverges from that of other cryptoassets. In addition, application of the tax rules applicable to those other forms of cryptoassets may result in administrative burdens to individuals and businesses that do not apply where fiat currency equivalents are used.

As a result, the government is considering implementing rules that treat stablecoins in a way that better reflects how they are used, whilst still ensuring those rules provide appropriate Exchequer protection.

In exploring potential reform, the government notes that an important element will be to determine which stablecoins any changes may apply to. The government recognises that restricting any revised tax approach to UK-issued qualifying stablecoins under the new regulatory regime would, at least initially, have a limited impact in a market where the majority of stablecoins widely used will not fall within that definition. Equally, it would be challenging to design new rules that could apply to all kinds of stablecoins, or to stablecoins that do not reliably maintain price stability. Therefore, it may be appropriate to limit any changes to certain currency-denominated, asset backed stablecoins.

A starting point for how within scope stablecoins are defined could be to align with the regulatory definition of 'qualifying stablecoin', which is a cryptoasset that:

• seeks or purports to maintain a stable value in relation to a particular fiat currency, and
• fiat currency or other assets are held for the purpose of maintaining a stable value relative to the reference currency.

Such a definition for tax purposes would mean that it would not matter where the stablecoins are issued.

Sterling-denominated stablecoin only?

It would also be necessary to determine whether scope of the reforms is limited to sterling-denominated stablecoins, or includes those denominated in other currencies. Sterling-denominated stablecoins would be included as part of any reforms as these should have negligible price movements and can reasonably be expected to be the most appropriate denomination for use in retail payments in the UK. At this stage it is less clear whether non-sterling-denominated stablecoins should also be included.

For example, currencies other than sterling are a chargeable asset for CGT purposes, with the result that gains are subject to CGT. If non-sterling denominated stablecoins were included in an exemption from CGT, it would mean a divergence in treatment from the fiat currency. On the other hand, currencies other than sterling are subject to certain exemptions that non-sterling denominated stablecoins are not (for example when held in a bank account), and so differences in treatment exist under the current rules.

There is also the question of whether the inclusion of non-sterling denominated stablecoins would have significant practical effect in terms of administrative burden, because (i) they will largely be used by those buying and selling cryptoassets or engaging in decentralised finance activities who are already likely to be using tax calculation software that will handle these transactions, and (ii) non-sterling denominated stablecoins are less likely to be used for retail payments in the UK.

Individuals

The consultation notes that one potential solution is to treat certain stablecoins as exempt assets. This would remove the need to treat a disposal of stablecoins as a chargeable event for CGT purposes.

A second potential option would be to remove reporting requirements for Self-Assessment purposes, for transactions of certain stablecoins made below a certain threshold. For example, where a stablecoin is used to make a low-value purchase of goods or services, that transaction would not need to be reported for CGT purposes. This option would not reduce computational burden as much as a total exemption.

The current treatment of stablecoins for income tax purposes does not generally seem to create problems as far as administrative complexity is concerned. As such, the government is not currently considering any other changes in this area, but is open to feedback.

Companies: corporation tax

Where a company holds a stablecoin on which a money debt arises, then that stablecoin would be expected to fall within the loan relationships rules, with the tax treatment based on the company's income statement. In other cases, the stablecoin would be expected to fall within the chargeable gains' rules.

The consultation raises the question whether there could be value in bringing more transactions into the scope of the loan relationship rules. One potential option could be to bring certain stablecoins into the loan relationship rules, perhaps by treating them as being money (or alternatively, treating them as a money debt or a loan relationship where they do not already constitute one).

Another issue is the treatment that arises where a company lends stablecoins. One option is to ensure that such a transaction is treated as a transaction for the lending of money. In addition, there may be value in providing that the creation of a cryptoasset token can constitute an instrument issued for the purposes of section 303(3) Corporation Tax Act 2009.

Since corporation tax does not differentiate between sterling and non-sterling currencies, it may be unnecessary to limit any changes in respect of corporation tax to sterling-denominated stablecoins.

There could, however, be a need to address situations where amounts are recognised to other comprehensive income (OCI) rather than the income statement for accounting purposes. Stablecoins within the scope of any changes could potentially be limited to just those that are accounted for as a financial asset. Alternatively, it may be necessary to have specific rules to bring into account amounts recognised in OCI.

Interest-like returns

The government is considering how interest-like returns on stablecoins should be treated for tax purposes going forwards, and would welcome input from stakeholders on this point.

Cryptoasset loans and liquidity pool arrangements

The government notes that lending of cryptoassets and liquidity pools are common arrangements in decentralised finance, which plays a significant role in the cryptoasset market. Such arrangements can often include the use of stablecoins. On 26 November 2025, the government published a summary of responses which set out a potential approach whereby certain disposals could be treated as 'no gain, no loss'. The effect of this would be that gains and losses on certain cryptoasset disposals would be rolled over into the base cost of a new asset.

The government recognises that any changes to stablecoin rules must be carefully considered alongside the potential approach being considered for cryptoasset loans and liquidity pools, to ensure that amounts of gains and losses do not fall out of tax. Consideration is therefore being given as to whether this could be achieved through:

• limiting the situations where the no gain, no loss approach can apply (so that it does not apply from an exempt asset to a non-exempt asset, or vice versa), and/or
• ensuring that where gains and losses are rolled over from a non-exempt asset into a new asset, that these continue to be within the scope of CGT on any future disposal.

Comment

The Call for Evidence is open until 7 May 2026 and responses should be sent to: digitalassets@hmrc.gov.uk

The government recognises that stablecoins have the potential to play a significant role in both retail and wholesale payments. Work is underway to take forward broader modernisation of payments assimilated law, including to ensure that the UK payments regime is fit for tokenised payments such as stablecoins. The government will set out further information on these reforms in due course.

The full list of questions asked by the Call for Evidence is below:

Question 1: Are there any further points of background in relation to stablecoins and the stablecoin market which would be relevant to this Call for Evidence?

Question 2: To what extent does the current CGT treatment:

• cause administrative or other difficulties for individuals, and/or
• deter the use of stablecoins, for example in retail payments?

Question 3: Are there any difficulties caused by the current Income Tax treatment of stablecoins, and to what extent do those difficulties deter their usage?

Question 4: Currently, how do companies typically account for stablecoins in practice? Please specifically include references to USDT and USDC, 2 of the major stablecoins in the current market, as well as other common stablecoins used by companies.

Question 5: How are stablecoins typically treated in practice for Corporation Tax purposes, including where the stablecoin is itself lent or borrowed by a company?

Question 6: To what extent is it possible in practice for a stablecoin:

• to be a loan relationship, but not be accounted for as a financial asset under IFRS 9 (or equivalent) and/or
• to not be a loan relationship, but to be accounted for as a financial asset under IFRS 9 (or equivalent)?

Question 7: Are there any difficulties caused by the current Corporation Tax treatment of stablecoins, and to what extent do difficulties deter companies from using them?

Question 8: For both individuals and companies, what problems could be caused by contrasting treatment of interest-like returns generated from stablecoins and actual interest on fiat currency debt?

Question 9: Do you consider there to be any potential difficulties with the treatment of stablecoins in respect of taxes other than CGT, Income Tax and Corporation Tax?

Question 10: Does the regulatory definition of qualifying stablecoin provide a suitable starting point for the scope of any potential tax changes?

Question 11: What would be the preferred option(s) for reforming the tax treatment of stablecoins in respect of CGT for individuals, and why?

Question 12: Should the scope of any changes to the CGT treatment be extended to include non-sterling denominated stablecoins? Why or why not?

Question 13: Are there any changes to the Income Tax treatment of stablecoins that you believe the government should be considering?

Question 14: If you consider that reform is needed for the taxation of stablecoins by companies, what would be the preferred option, and why?

Question 15: Should there be an additional accountancy-based limitation on what stablecoins are included in any reforms, or specific rules to address amounts recognised in OCI? Why or why not?

Question 16: For both individuals and companies, would it be preferable for interest-like returns to be treated in the same way as actual interest? Why or why not?

Question 17: To what extent are stablecoins used in liquidity pool arrangements? Please provide any estimates of the market share of lending and liquidity pool arrangements that involve stablecoins, including figures to support where possible.

Question 18: How should the treatment of cryptoasset loans and liquidity pools interact with the treatment of stablecoins? Would the proposed options in sections above create opportunities for tax avoidance involving lending and liquidity pools?