UK to Mandate Crypto Reporting on All Customer Transactions Starting 2026: A Major Step Toward Enhanced Tax Transparency and Regulation

Starting January 1, 2026, all cryptocurrency firms operating in the United Kingdom will be required to collect and report detailed data on every customer transaction, marking a significant tightening of crypto regulatory and tax compliance standards. This new mandate, announced by the UK’s Revenue and Customs department (HMRC) on May 14, 2025, is part of a broader government initiative to improve transparency, combat fraud, and ensure accurate tax reporting within the rapidly growing crypto sector.

What the New Reporting Requirements Entail

Under the new rules, crypto companies-including exchanges, custodians, broker-dealers, and other service providers-must collect comprehensive information for every trade, transfer, or transaction made by their customers. The data to be reported includes:

• The full name of the user

• Home address

• Tax identification number

• Details of the cryptocurrency involved

• The amount and value of crypto moved or traded

Importantly, these requirements extend beyond individual users to encompass companies, trusts, and charities transacting on crypto platforms, reflecting the government’s intent to cover all types of entities engaging with digital assets.

Failure to comply with the reporting obligations or submitting inaccurate data could result in penalties of up to £300 (approximately $398.40) per user, underscoring the seriousness with which HMRC views enforcement.

Early Compliance Encouraged

While the mandate officially takes effect in 2026, UK authorities are urging crypto firms to begin collecting the required data immediately to ensure readiness and smooth compliance once the rules come into force.

HMRC has committed to providing detailed guidance and support to firms to help them adapt their systems and processes in line with the new standards.

Integration with International Standards: OECD’s Cryptoasset Reporting Framework

The UK’s new reporting regime aligns with the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework (CARF), an international standard designed to enhance transparency and cooperation among tax authorities globally.

By adopting CARF, the UK aims to:

• Close tax gaps related to crypto trading and transfers

• Improve the accuracy of tax declarations by crypto investors

• Strengthen cross-border information sharing to detect tax evasion and illicit activities

This move places the UK among the leading jurisdictions actively implementing rigorous crypto tax reporting frameworks in line with global best practices.

Supporting Industry Growth While Protecting Consumers

The UK government emphasizes that its regulatory approach seeks to balance fostering innovation and growth within the crypto industry with robust consumer protection measures.

In late April 2025, UK Chancellor Rachel Reeves introduced a draft bill designed to bring crypto exchanges, custodians, and broker-dealers firmly within the country’s regulatory perimeter. The bill aims to combat scams, fraud, and market abuse, sending a clear message that while Britain welcomes crypto business, it will not tolerate instability or criminal activity.

Reeves stated,
“Today’s announcement sends a clear signal: Britain is open for business – but closed to fraud, abuse, and instability.”

Growing Crypto Adoption in the UK

The UK’s proactive regulatory stance comes amid rapidly increasing crypto adoption among its population. A study by the Financial Conduct Authority (FCA) in November 2024 revealed that approximately 12% of UK adults owned some form of cryptocurrency, a substantial rise from just 4% in 2021.

This growing user base underscores the importance of clear, effective regulation to protect consumers and ensure the sector’s sustainable development.

UK’s Regulatory Approach vs. European Union’s MiCA Framework

The UK’s strategy contrasts with the European Union’s recently implemented Markets in Crypto-Assets Regulation (MiCA), which introduces a comprehensive regulatory framework across EU member states.

Key differences include:

• Stablecoin Issuers: The UK will permit foreign stablecoin issuers to operate without mandatory registration, whereas MiCA imposes stricter registration and authorization requirements.

• Stablecoin Volume Caps: The EU’s MiCA framework may enforce caps on stablecoin issuance to mitigate systemic risks, while the UK has opted not to impose such volume limits.

These distinctions highlight the UK’s preference for integrating crypto rules into its existing financial regulatory framework, aiming to maintain competitiveness and attract international crypto businesses.

Market Impact and Industry Reaction

The new reporting requirements are expected to have broad implications for the UK crypto ecosystem:

• Increased Compliance Costs: Crypto firms will need to upgrade their data collection, reporting, and compliance infrastructure, potentially increasing operational costs.

• Enhanced Tax Revenue: HMRC anticipates improved tax compliance and revenue collection from crypto-related activities, reducing the shadow economy.

• Investor Confidence: Clear regulatory guidelines and enforcement may boost investor confidence by reducing fraud and market manipulation risks.

Industry stakeholders have generally welcomed the clarity but caution that successful implementation will require collaboration between regulators and market participants.

Related Developments

• Bitwise Lists Four Crypto ETPs on London Stock Exchange: Reflecting growing institutional interest in crypto, Bitwise recently expanded its offerings on the LSE, providing investors with diversified exposure to digital assets.

• Global Regulatory Trends: The UK’s move is part of a global wave of crypto regulation, with countries like the U.S., Singapore, and Japan also enhancing reporting and compliance requirements.

Conclusion: A New Era of Crypto Transparency in the UK

The UK’s mandate requiring crypto firms to report every customer transaction starting in 2026 marks a significant milestone in the maturation of the crypto industry. By aligning with international standards and emphasizing consumer protection, the UK government aims to foster a secure, transparent, and innovative crypto market.

For crypto businesses and investors, early preparation and adherence to the new rules will be essential to navigate this evolving regulatory landscape successfully.