The UK government has proposed new legislation introducing a "no gain, no loss" tax treatment for Decentralized Finance (DeFi) transactions. Under the current rules, lending crypto assets or staking them in liquidity pools can trigger a capital gains tax event even if the user hasn't realized a profit. The new proposal seeks to prevent these interim transactions from being treated as taxable disposals. Instead, tax liability would be deferred until the actual economic disposal of the asset, bringing the tax treatment of DeFi closer to that of traditional stock lending and repo transactions. This move is designed to reduce the administrative burden on crypto users and remove barriers to entry for DeFi activities. [Update 1] New reports highlight that this initiative specifically aims to foster a more favorable environment for decentralized finance by ensuring that activities like liquidity provision do not trigger immediate tax liabilities. The measure supports the UK's broader ambition to establish itself as a global hub for crypto asset technology.