Taxation of stablecoins

Q: 6. Assessment of impacts

Further information on the impacts of this policy on HMRC , our customers and the Exchequer will be worked through as the policy develops.

Question 1

Summary

Accepted Answer

Subject of this Call for Evidence

The government is seeking views on the taxation of stablecoins, a type of cryptoasset that seeks to maintain a stable value by reference to another asset, such as a fiat currency. The government is seeking views on issues around the tax treatment, as well as any administrative burdens this might cause as the stablecoin market develops.

Scope of this consultation

Stablecoins are generally treated like other cryptoassets for tax purposes. With them potentially playing 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.

Who should read this

The Call for Evidence is seeking views on how stablecoins are treated for both individuals and companies. The government would like to hear from investors, professionals and firms that use stablecoins, including technology and financial service firms; trade associations and representative bodies; academic institutions and think tanks; and legal, accountancy and tax advisory firms.

Duration

26 March 2026 to 7 May 2026.

Lead official

Robert Smith, HM Revenue and Customs

How to respond or enquire about this consultation

Please email: digitalassets@hmrc.gov.uk

Additional ways to be involved

HMRC will consider holding meetings with interested parties to discuss the issues raised in this Call for Evidence. The timing, format and venue of meetings will be informed by expressions of interest received.

After the Call for Evidence

Following this call for evidence, the government will publish details of its next steps.

Getting to this stage

This Call for Evidence is the first part of the tax policy making process in respect of the taxation of stablecoins.

Question 2

1. Introduction

Accepted Answer

The government recognises the transformative potential of digital assets and blockchain technologies to drive economic growth in the UK and increase efficiencies across financial markets. Stablecoins can play an important role in achieving this.

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 (such as, pound sterling) or a commodity (such as, gold)
holding a reserve of backing assets

Popular examples include Tether (USDT) and USD Coin (USDC).

Recognising the importance of certainty and predictability in taxation, the government is launching this Call for Evidence to gather input from stakeholders on the tax treatment of stablecoins. This includes views on administration as well as the tax treatment itself.

Please note that throughout this document, references to a stablecoin being ‘denominated’ in a particular currency are solely to stablecoins that maintain their value by reference to that currency.

Question 3

2. Background

Accepted Answer

Stablecoins look to combine the benefits of blockchain technology with the value stability of traditional money. This means they have the potential to be attractive for everyday payment transactions.

Stablecoin structures and user rights differ significantly across issuers and across user types. Most stablecoins in the market reference a single fiat currency. They are typically designed so that the stablecoin’s value is supported by backing assets held by (or for) the issuer, though the nature, liquidity and legal segregation of backing assets can vary.

Stablecoins are often structured with an expectation of redemption at par value for eligible holders, but eligibility and redemption mechanics may be restricted (for example by customer type, minimum redemption size, fees, or timing). A less common approach is for stablecoins to operate by way of algorithmic or protocol-based mechanism.

We understand that to date, stablecoins have predominantly been used for buying into and selling out of more volatile cryptoassets, and in decentralised finance applications. However, 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.

The government has taken steps to establish a new financial services regulatory regime for cryptoassets which is expected to come into effect in late 2027. Firms carrying on activities within the scope of the regulatory framework in the UK or for UK consumers will be regulated by the Financial Conduct Authority (FCA), which is expected to finalise the relevant rules, guidance and open the application gateway before the end of 2026.

The UK’s 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. The regime also introduces a new regulated activity for issuing these stablecoins from an establishment in the UK, and regulatory rules are expected to ensure that these UK-issued stablecoins are fully backed and redemption rights with the issuer are guaranteed. Purely algorithmic stablecoins are not within scope of the new regime.

The Bank of England launched a consultation in November 2025 on ‘systemic stablecoins’, defined as those that are widely used in payments and therefore may pose risks to UK financial stability. Such stablecoins will be jointly regulated by the Bank of England and the FCA, whereas non-systemic stablecoins which still meet the criteria for regulation under the FCA’s new regime will be solely regulated by the FCA.

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.

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 4

3. Current tax treatment

Accepted Answer

Generally speaking, stablecoins are currently treated in the same way as other cryptoassets. There are no specific tax rules for their treatment, nor is the term ‘stablecoin’ specifically defined in existing tax legislation. The treatment that applies will depend on the circumstances in which they are used, and can also depend on the particular features of the stablecoin in question, but they would not generally be considered as money.

Although they are designed to maintain a stable value, economic gains and losses can still arise on stablecoins. The most obvious example is as a result of foreign exchange movements on non-sterling denominated stablecoins. However, gains and losses can also arise in situations where a stablecoin’s value deviates, whether temporarily or permanently, from its par value.

Individuals — Capital Gains Tax

Capital Gains Tax (CGT) treatment applies where an individual disposes of an asset that is not exempt, and where no other tax rules take priority.

Stablecoins will typically be chargeable assets in the same way as other types of cryptoassets, regardless of whether they reference sterling, a foreign currency, other assets, or are stabilised through a pricing algorithm. Depending on the redemption rights they provide and who holds the token, some stablecoins can legally amount to a debt between issuer and holder in respect of the referenced fiat currency. The CGT rules provide an exemption for simple debts. However, this is unlikely to apply to stablecoins in the vast majority of cases as, even where there is a debt, the exemption only applies where the debt is disposed of by the original creditor, which for a stablecoin is unlikely to be an individual.

This means that under the current rules, the use of stablecoins as a means of payment will typically constitute a disposal for CGT purposes. As a result, the acquisition and disposal cost must be recorded in order to carry out a capital gains (or losses) computation. In the case of sterling-denominated stablecoins, any gain (or loss) is likely to be negligible because a sterling-denominated stablecoin should not fluctuate relative to sterling. However, such transactions must still be tracked, as once aggregate proceeds from all disposals exceed £50,000, they may need to be reported to HMRC irrespective of whether gains or losses arise. Foreign currency denominated stablecoins will fluctuate in value relative to sterling due to exchange movements, and therefore will likely give rise to a gain or loss on their disposal.

We understand that to date, stablecoins have primarily been used in the cryptoasset ecosystem to facilitate the purchase and sale of other cryptoassets, and as part of decentralised finance arrangements. For individuals who are actively engaged in a high volume of cryptoassets transactions, it is common to rely on tax calculator software to assist with tax computations. In such cases, the tax calculator software should also be able to calculate the gains and losses arising on the stablecoins.

However, a broader adoption of stablecoins as a means of retail payment would involve individuals making everyday purchases using stablecoins, as opposed to using them in the cryptoasset ecosystem. Where there is broader adoption, individuals are unlikely to be familiar with using tax calculator software, and it is likely to be impractical. The requirement to track these transactions for tax compliance would be an administrative burden that does not exist for other, more traditional means of retail payment (such as cash or card payments) and could therefore act as a disincentive to their use.

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?

Individuals — Income Tax

Income Tax could apply in situations involving stablecoins, for example:

where stablecoins are received as remuneration as part of an individual’s employment, they would be charged to Income Tax in the usual way
where returns are generated on stablecoins that are staked or lent, and the returns are not profits of a trade, they would be taxed as miscellaneous income
where payments are received by individuals in the form of stablecoins for the provision of goods or services in the course of running a business, they would be subject to Income Tax as trading income
where an individual uses stablecoins as part of a trade they are carrying on in buying and selling cryptoassets, any profits from those stablecoins would be charged to Income Tax along with the other profits of that trade

Income received in the form of stablecoins would be expected to be taxable in the same or similar way as if they were paid in cash. Therefore, their current treatment under Income Tax provisions does not appear to cause disproportionate administrative burdens for individuals.

Income Tax can also apply to interest — this is discussed in a later section.

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?

Companies — Corporation Tax

Companies are liable to pay Corporation Tax on their income and gains, whether trading profits, chargeable gains or other taxable income. They are also subject to corporate-specific rules that do not apply to individuals. As a result, the tax issues arising from the treatment of stablecoins for companies are likely to differ from those relevant to individuals.

Accounting treatment

How a stablecoin is accounted for can be relevant for how they are treated for Corporation Tax purposes. There is currently no dedicated accounting standard in International Financial Reporting Standards or UK Generally Accepted Accounting Practice for cryptoassets, including stablecoins.

The accounting treatment of a stablecoin depends on applying the relevant accounting standards to the specific facts and circumstances, including the terms and conditions of the stablecoin and the purpose for which it is held. Where a stablecoin is recognised by the holder as an asset for accounting purposes, we understand it will generally be accounted for as either a financial asset, inventory or an intangible asset depending on the specific facts.

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.

Current tax treatment for companies

The precise tax treatment of stablecoins by companies will depend on the particular features of the stablecoins in question and how they are used by the company. The following tax regimes could potentially be relevant:

loan relationships: A company has a loan relationship when it has a money debt that arises from a transaction for the lending of money (or a money debt where an instrument has been issued representing security for it or creditor rights in respect of it). Where a stablecoin provides rights of redemption for the holder, a money debt will likely arise. As a result, these may (depending on the wider circumstances) fall within the loan relationship rules, with profits or losses taxed or relieved as income based on the accounts. For foreign currency-denominated stablecoins, specialist exchange gains and losses rules could apply (such as the Disregard Regulations – for more information see CFM62600)
intangible fixed assets (IFAs): Although they may be accounted for as intangible assets, stablecoins will not typically meet the requirements to be taxed under the Intangible Fixed Assets regime. In particular, stablecoins are unlikely to be ‘acquired or created for use on a continuing basis’ in the company’s business ,( a ‘fixed asset’)
trading: Where the stablecoin is used for the purposes of a trade carried on by the company, for example as part of a trade in buying and selling cryptoassets, then any profits or losses arising on it will be taxed as part of the company’s trading profits. This could either be by virtue of being a trading loan relationship or directly as part of the trading profits calculation
chargeable gains: If no other rules apply, then gains and losses arising will be calculated under the chargeable gains rules for companies. This will require separate calculations to determine the taxable gains and losses on disposals of stablecoins

Additional complexity can arise where a company lends a stablecoin. If the stablecoin itself is a loan relationship, the lending of that stablecoin will create a money debt. However, the lending is unlikely to be an actual loan relationship, because stablecoins are not generally considered to be money and therefore there is no transaction for the lending of money. Instead, amounts such as exchange gains and losses and impairment losses would be brought into account under the non-lending relationship rules in Part 6 Corporation Tax Act 2009. Returns on lending, however, would generally not be treated as interest (because they are not returns on the lending of money) and would instead be expected to be miscellaneous income under Part 10 Corporation Tax Act 2009.

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?

Individuals and Companies — Interest-like returns

There is no statutory definition of interest, but it has been the subject of much judicial consideration over the years. Case law has established that interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. A payment cannot be ‘interest of money’ unless there is the requisite sum of ‘money’ for the payment to be said to be ‘interest of’.

Where interest on the lending of money is paid using stablecoins, then the rules will generally apply in the same way as if the interest was paid using fiat currency. For example, such payments may be subject to withholding tax.

In general, stablecoins are not considered to be money and so any returns generated from the lending of stablecoins are not considered to be interest.

Individuals

For individuals, receipts from the lending of stablecoins would ordinarily be subject to Income Tax as miscellaneous income (Part 5 of ITTOIA 2005) as opposed to savings and investment income (Part 4 of ITTOIA 2005). If lending of stablecoins becomes more prevalent, this could create a disparity compared to the lending of fiat currency where the returns would be taxed as savings and investment income.

Specifically, even though the economic substance could be the same, there could be meaningful differences in taxation, for example:

returns on stablecoin lending would be eligible for Trading and Miscellaneous Income Allowance (TMIA) rather than the Personal Savings Allowance (PSA), and
withholding tax would not be deducted from certain interest-equivalent payments on stablecoin borrowing

Companies

Similarly for companies, where a stablecoin is lent, the return on that stablecoin is not considered to be interest. Companies are not eligible for TMIA or PSA. However, the withholding tax point would remain relevant.

If stablecoin lending and borrowing transactions were brought within the loan relationship rules in Part 5 Corporation Tax Act 2009 (as explored below), it would mean such returns were treated as income in the same way as interest.

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?

Other taxes

The government considers that the current position in respect of other taxes is unlikely to cause particular issues in the context of stablecoins. In particular:

Stamp Taxes

Stamp Duty and Stamp Duty Reserve Tax (SDRT) are in the process of being consolidated into a single regime called the Securities Transfer Charge (STC). STC will use the SDRT definition of consideration, which is defined as ‘money or money’s worth’. Similarly, chargeable consideration for Stamp Duty Land Tax (SDLT) comprises anything given for the transaction that is money or money’s worth.

Cryptoassets, including stablecoins, already meet the definition of money’s worth, and so any consideration in respect of share or land transactions that is or includes stablecoins will be chargeable consideration for both SDLT and the new STC framework.

Inheritance Tax

Inheritance Tax is charged on the value of an individual’s estate, which is defined as ‘all the property to which’ an individual ‘is beneficially entitled’. Cryptoassets, including stablecoins, are treated as an asset of an estate and so fall within this definition. This means they are charged to Inheritance Tax, where appropriate, in the same way as any other asset.

VAT

Where stablecoins are used as consideration for a supply of goods or services, VAT applies to the underlying supply in the usual way. This Call for Evidence is not intended to cover the VAT treatment of exchange or intermediary services relating to cryptoassets.

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 5

4. Options for potential reform

Accepted Answer

General

The government recognises that the current tax treatment of stablecoins may result in administrative burdens to individuals and businesses that do not apply where fiat currency equivalents are used. The government also notes that the strong potential use case for stablecoins in retail and wholesale payments, together with their price stability, may justify a tax treatment that diverges from that of other cryptoassets.

As a result, it may be appropriate to consider implementing rules that treat stablecoins in a way that better reflects how they are used, whilst still ensuring those rules provide appropriate Exchequer protection.

This section outlines some potential options for consideration for reforming the taxation of stablecoins and associated transactions. The government welcomes suggestions from stakeholders.

In exploring any potential reform, it will be important to understand 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 stablecoins within the scope 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.

It would also be necessary to determine whether scope is limited to sterling-denominated stablecoins, or includes those denominated in other currencies. The scope for individuals could differ to that for companies, and so this question is addressed in the relevant section below.

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

Individuals — Capital Gains Tax

As outlined above, there is a substantive administrative burden for individuals using stablecoins as they will typically be required to calculate the gains and losses for CGT purposes. The government is interested in exploring options that could alleviate this burden.

One potential solution is to treat certain stablecoins as exempt assets. This would remove the need to treat disposals of such stablecoins as chargeable events 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.

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

Which currency-denominated stablecoins should be included in scope of any reformed tax treatment?

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.

Currencies other than sterling are a chargeable asset for CGT purposes, with the result that gains are subject to CGT and losses would typically be available to offset against current year and future gains. If non-sterling denominated stablecoins were included in an exemption from CGT, it would mean a divergence in treatment from the fiat currencies (a USD stablecoin would be treated differently to USD).

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.

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

Individuals — Income Tax

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.

The treatment of interest-like returns is considered seperately below.

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

Companies — Corporation Tax

As noted above, 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.

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 (either directly into Part 5 or through Part 6 Corporation Tax Act 2009). This could be achieved 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.

Which currency-denominated stablecoins should be included in scope of any reformed tax treatment?

There is no differentiation in treatment between sterling and non-sterling currencies for Corporation Tax purposes (in contrast to how they are treated for CGT for individuals). Therefore, it may be regarded as 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.

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?

Individuals and Companies — Interest-like returns

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

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 6

5. Other considerations

Accepted Answer

Cryptoasset Loans and Liquidity Pool Arrangements

We understand 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. This is particularly the case for automated market makers that use stablecoins in place of fiat currency to allow market participants to buy-into and sell-out of other cryptoassets.

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.

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?

Question 7

6. Assessment of impacts

Accepted Answer

Further information on the impacts of this policy on HMRC, our customers and the Exchequer will be worked through as the policy develops.

Question 8

7. Summary of Call for Evidence questions

Accepted Answer