Consultation response: Taxation of Stablecoins

The ATT has responded to the Government's call for evidence on the taxation of stablecoins for individuals and companies. Stablecoins are a type of cryptoasset that seek to maintain a stable value by reference to another asset, such as the dollar or sterling. The Government sought views on issues around the tax treatment, as well as any administrative burdens this might cause as the stablecoin market develops.

The ATT's response reported a range of views from members. Some were keen to support the exemption of stablecoins from CGT in order to simplify the use of such coins as intermediate steps in smart contracts, while others were concerned that the proposed changes to CGT on transactions and income tax on returns could create additional complexities which investors may find difficult to manage.

Given the mixed evidence we received, the ATT has not taken a specific position on the taxation of stablecoins. However, we did make two overarching comments. Firstly, if changes are made then they should be done so as part of a wider roadmap for changes to the taxation of electronic assets. Secondly, despite the limitations of software, unless a cryptoasset portfolio is very simple, or the number of transactions is very limited, software is often the only practical way to establish the tax position for the year. The ATT considers that further changes to current tax treatment should therefore focus on measures that can be robustly implemented by these third party providers.

We also took the opportunity to ask for more guidance in relation to IHT for cryptoassets more generally, not just stablecoins. The focus to date for guidance has been on annual taxes, but if steps are taken to support investment into cryptoassets, including stablecoins, then provisions also need to be made for the specific challenges these assets present on death.