UK to enforce new crypto reporting rules by 2026
Starting January 1, 2026, cryptocurrency companies operating in the UK must collect and report detailed personal and transaction data from their users. The rule covers both individual and business accounts and includes full names, addresses, and tax identification numbers.
Firms face £300 penalty per user for errors
HM Revenue & Customs (HMRC) confirmed the update last week. The new reporting obligations are based on the OECD’s Cryptoasset Reporting Framework (CARF), which aims to create a global standard for tax transparency in the cryptocurrency sector.
HMRC has advised companies to start preparing early. Inaccurate or incomplete reports could result in fines of up to £300 per user. Cryptocurrency firms will also be responsible for verifying the accuracy of the data they collect, with due diligence rules expected to be published in a future update.
Extensive data collection requirements
The new rules apply to any cryptocurrency transaction involving users in the UK or in other countries adopting the CARF standard. For individual users, firms must collect the name, date of birth, home address, country of residence, and a tax reference number. UK residents must provide their National Insurance number or Unique Taxpayer Reference, whereas non-residents must provide their TIN and the country where it was issued.
For businesses, the requirements include the registered business name, primary address, and registration number for UK entities. Foreign firms must provide a TIN and issuing country. In some cases, platforms must also record information about controlling persons in the business.
All transactions must be logged with details about the cryptoasset type, transaction type, quantity, and value.
The adjustments come as interest in cryptocurrency continues to rise in the UK. According to a YouGov survey, the percentage of UK adults who have purchased cryptocurrencies rose from 6% in 2022 to 14% in 2023. The upward trend suggests that the new rules will likely affect a growing number of users.
FCA tightens oversight and considers credit restrictions
Separately, the UK Financial Conduct Authority (FCA) is considering a ban on using credit to buy crypto. However, stablecoins approved by the regulator would not be affected. The FCA is currently consulting the public on this and other possible rules.
All cryptocurrency firms in the UK are already required to register with the FCA. The agency’s authority so far includes anti-money laundering, financial promotion, and consumer protection rules. Between April 2023 and April 2024, the FCA rejected 86% of cryptocurrency registration applications. The rejection rate has since dropped to 75% in the current financial year.
UK’s strategy differs from the EU
The UK’s regulatory approach diverges from the European Union’s Markets in Cryptocurrency-Assets (MiCA) Regulation. Unlike the EU, the UK plans to allow overseas stablecoin issuers to operate without registering. There are also no volume limits on stablecoin transactions – another difference from the EU, which may impose such caps to manage systemic risk.
(Photo by Unsplash)
See also: Coinbase estimates $400M cost after data breach and cryptocurrency scam
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