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