David Edwards
The United Kingdom will require cryptocurrency companies to collect and report detailed information on every customer trade and transfer starting January 1, 2026, as part of an effort to enhance crypto tax transparency and compliance.
New Requirements for Crypto Firms
According to a May 14 announcement by HM Revenue and Customs (HMRC), crypto firms must report users’ full names, home addresses, tax identification numbers, the type of cryptocurrency used, and the transaction amounts. These rules apply to all transactions, including those involving companies, trusts, and charities.
Non-compliance or inaccurate reporting may result in penalties of up to £300 (approximately $398) per user. While the government plans to issue further guidance on compliance procedures, it is encouraging firms to begin data collection immediately to prepare for the changes.
The policy aligns with the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework (CARF), which aims to standardize and strengthen international tax enforcement related to digital assets.
Strengthening Regulation While Supporting Innovation
The UK’s decision is part of its broader strategy to create a secure and transparent digital asset environment that fosters innovation while protecting consumers. In a related move, UK Chancellor Rachel Reeves recently introduced a draft bill to bring crypto exchanges, custodians, and broker-dealers under tighter regulatory oversight. The legislation is designed to combat fraud and increase market integrity.
“Today’s announcement sends a clear signal: Britain is open for business — but closed to fraud, abuse, and instability,” Reeves said.
Contrasting Approaches: UK vs. EU
The UK’s regulatory strategy diverges from the European Union’s Markets in Crypto-Assets (MiCA) framework. Notably, the UK will permit foreign stablecoin issuers to operate without local registration and will not impose volume caps, unlike the EU, which may restrict stablecoin issuance to mitigate systemic risks.
This flexible approach is intended to attract global crypto innovation while maintaining oversight through integrated financial regulations.
