Response to the call for evidence on the taxation of stablecoins

Bitcoin Policy UK responded to HMRC's call for evidence on the taxation of stablecoins. The response welcomes the recognition that stablecoins used for retail and wholesale payments may justify different tax treatment from other cryptoassets, but argues that the same logic should apply to Bitcoin when it is used to buy goods and services rather than held as a speculative investment. Under current UK rules, every time someone spends Bitcoin it counts as a disposal for capital gains tax, so even a small purchase creates a taxable event that the user is expected to calculate and record.

The response describes this as “regulatory theatre”, arguing that lawful “bed-and-breakfasting”, where a holder spends Bitcoin and immediately buys back the same amount, means HMRC collects almost no capital gains tax from genuine payments while users and merchants still face complex record keeping. It supports a full capital gains tax exemption for retail payments for goods and services, with speculative trading still taxed and long-term investments subject to normal capital gains tax on disposal. It argues that removing this friction would increase transaction activity and VAT receipts, and points to more favourable crypto tax rules in the Czech Republic and Germany.