Stablecoins are digital tokens that stay pegged to the value of fiat currencies like USD or GBP. Two examples of stablecoins are DAI and USDC, which are both redeemable for $1 on various exchanges.

Now, as a UK resident, I'm bewildered about how I should handle stablecoins in my tax report. I use them in two ways:

  1. Holding them as a hedge against GBP
  2. Occasional speculation, selling DAI (non-volatile) for Ether (volatile)

Let's say I hold 5,000 DAI (approximately $5,000) and I use it all to buy Ether when its price is 200 DAI, so I effectively purchase 25 Ether. Let's further imagine that the price of Ether goes to 210 DAI and I sell it all, but I don't sell it for GBP, I sell it for DAI again. I would now have 5,500 DAI, cashing in 500 DAI as a net profit (excluding transaction fees).

How does the HMRC treat this trade? Considering that DAI is not legal tender, is it even a profit if I never convert it back to GBP?

The official guidance on the topic of stablecoins is rather shallow.

  • The guidance seems very detailed and comprehensive to me. What us it that you are not understanding? Apr 12, 2020 at 0:00
  • Indeed after re-reading the document a few times, things clearer now. I may write an answer these days. What I am still unsure about is whether one should consider stablecoins on par value with their pegged currency (1 DAI = 1 USD), or look up the historical rates on a data provider like messari.io. Apr 12, 2020 at 0:24

1 Answer 1


If you need to pay capital gains tax, I think that you need to record each step in the trade as if it were a transaction to and from GBP. So it may look something like this:

1. Buy 5,000 DAI for 3,789.77 GBP
2. Buy 25 ETH for 200 DAI
    2.1 This is a sell of 200 DAI for X GBP
    2.1 This is a a buy of 25 ETH for X GBP
3. Sell 25 ETH for 210 DAI
    3.1 This is a sell of 25 ETH for Y GBP
    3.1 This is a buy of 210 DIA for Y GBP

This is at least how I'm calculating the amount of capital gains tax that I owe for simple trading. Working out the rate's at each step is a little trickier, i.e. in order to work out profits or losses.


Note, I am not a tax specialist so you should double check these statements and double check the updated tax regulations.


A friend said that you could buy a stable coin, TrueUSD or TrueGBP. A stable coin should just be treated like any other crypto assets, so your capital gains on taking a stable coin would be 0.0 GBP.



But if you're invested in DAI, or PAX, pegged to a dollar, you might have to pay any gains on currency fluctuations, which are unlikely to be high.

  • It is indeed very difficult to calculate the GBP rate at each step. Almost all financial assets in DeFi are priced in dollars, or derivatives of dollars, so to convert everything to GBP, you'd need to first convert from the crypto asset, then to USD, then finally to GBP. Complexity goes through the roof. Sep 25, 2020 at 20:18
  • Sure ... but it's not too difficult ;-) I dollar cost average into these assets and use that as the buy rate, and then work out the sell rate when I sell. I'm happy to share some code in python that I use to do this ... Also, FYI, most exchanges should offer the ability to export your transactions as a CSV file, allowing you the ability to query a GBP conversion at a specific time. Sep 26, 2020 at 15:50
  • @PaulRazvanBerg See the helpful suggestion ... Sep 26, 2020 at 16:50

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