Her Majesty’s Revenue and Customs (HMRC), the U.K.’s tax agency, on Wednesday, has released a controversial set of guidance that could affect innovation in Decentralized Finance (DeFi).

The UpdatedThe regulation covers the taxation of digital assets, including those used for DeFi lending or staking in UK. This includes whether the returns and rewards received from services will be treated as income or capital. These services are extremely innovative and tax professionals have difficulty understanding the rules.