In a landmark move, UK regulatory bodies have announced that starting in 2026, all local crypto platforms will be mandated to log user transactions. This new rule signifies a substantial shift in the UK”s approach to crypto reporting, expanding the existing Cryptoasset Reporting Framework (CARF).
Sources familiar with the development indicated that with this regulation, His Majesty”s Revenue and Customs (HMRC) will gain automatic access to both domestic and international crypto transaction data for the first time. This decision aims to bolster tax compliance in anticipation of CARF”s inaugural global information exchange, set to occur in 2027.
The Organisation for Economic Co-operation and Development (OECD) initiated CARF in June 2022, with the official guidelines released to the public in June 2023. The framework was designed to facilitate the automatic exchange of crypto transaction information among tax authorities worldwide. Under CARF, crypto service providers will be required to conduct thorough background checks, verify user identities, and submit annual reports detailing transaction information.
It is important to note that CARF primarily targets cross-border transactions. Therefore, reports suggest that crypto activities solely occurring within the UK will not be subjected to these automatic reporting obligations, as detailed in a policy paper released by HMRC. The government”s initial intent was to prevent cryptocurrencies from being categorized as an “off-CRS” asset class, motivating the inclusion of domestic users in this framework.
This initiative indicates the government”s determination to ensure that crypto transactions are accurately reported, similar to traditional financial accounts under the Common Reporting Standard. UK officials believe that this comprehensive approach will streamline reporting processes for crypto firms and provide tax authorities with a more robust dataset to identify noncompliance and assess taxpayer obligations.
Additionally, this week, the UK introduced a new tax scheme dubbed “no gain, no loss,” which allows decentralized finance (DeFi) users to delay capital gains taxes until they sell their tokens. Feedback from the local industry regarding this new tax plan has been largely positive.
The UK”s regulatory shift occurs against a backdrop of governments worldwide revising tax regulations to improve tracking of digital asset activities amid rising cryptocurrency adoption. For example, South Korea has recently intensified its tax regulations, while Spain has proposed increasing the top tax rate on crypto profits to 47%. Meanwhile, Switzerland has postponed the commencement of automatic information sharing regarding cryptocurrencies with foreign tax authorities until 2027, although CARF rules will still be integrated into Swiss law on January 1.
In the United States, legislation has been introduced allowing federal taxes to be paid in Bitcoin, marking a significant development in the intersection of cryptocurrency and government finance.
