Abstract:The United Kingdom is taking major steps to tighten control over cryptocurrency by introducing new tax reporting rules that will come into force on 1 January 2026. Under the new rules, crypto companies in the UK will have to collect and report full customer details for every transaction, no matter how small.
The United Kingdom is taking major steps to tighten control over cryptocurrency by introducing new tax reporting rules that will come into force on 1 January 2026. Under the new rules, crypto companies in the UK will have to collect and report full customer details for every transaction, no matter how small.
The rules were set out by HM Revenue and Customs (HMRC) and are part of the UKs plan to follow the international Cryptoasset Reporting Framework (CARF), created by the Organisation for Economic Co-operation and Development (OECD). The goal is to fight tax evasion and create a clearer tax system for digital assets.
From 2026, crypto firms must collect a customers full name, home address, tax ID number, the type of cryptocurrency used, and the amount traded. These rules will apply to everyone, including individuals, companies, charities, and trusts. If companies fail to follow the rules or report incorrect data, they could be fined up to £300 per user.
HMRC has advised crypto businesses to begin gathering this data now to be ready for the change. The government has said that more guidance will be provided to help companies meet the new requirements.
This move is part of the UK‘s broader effort to bring cryptocurrency under stronger regulation, while still supporting the growth of the industry. Recently, the country’s financial watchdog, the Financial Conduct Authority (FCA), proposed banning the use of credit cards to buy crypto. This is aimed at protecting consumers from financial risks.
In addition, draft laws introduced by Chancellor Rachel Reeves in April would bring crypto exchanges, custodians, and brokers under the same rules as traditional financial services. These changes are meant to reduce fraud and scams. Reeves stated that while the UK is open for business, it is also serious about stopping abuse and instability.
The UK‘s approach is different from the European Union’s crypto rules under the MiCA regulation. While the EU places limits on stablecoin issuers and requires them to register, the UK will allow foreign stablecoin firms to operate without needing to register or follow volume limits.
The FCA is also reviewing how to better regulate crypto lending and borrowing. This includes rules around checking investor knowledge, requiring credit checks, and improving transparency in a space often criticised for being unclear and risky.
However, this major shift also raises important questions. By forcing all crypto users to share personal information for every transaction, the UK may be challenging the core idea behind cryptocurrencies, that is privacy and freedom from central control. Could these new rules take away one of cryptos biggest advantages? Or are they a necessary step to make digital finance safer and more trustworthy as it becomes more widely used?
Crypto ownership in the UK is growing quickly. According to a 2024 FCA survey, 12% of adults now hold digital assets, compared to just 4% in 2021. As the rules become tighter, the UK faces the challenge of supporting innovation while making sure the system is fair and secure for everyone.
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