New Reporting Requirements for Cryptocurrency Platforms in the UK
Starting in 2026, all cryptocurrency platforms operating in the United Kingdom will be mandated to report any transactions made by users residing in the UK. This marks an expansion of the existing Cryptoasset Reporting Framework (CARF).
Implications for Tax Compliance
This new requirement will enable His Majesty’s Revenue and Customs (HMRC), the UK tax authority, to access both domestic and international cryptocurrency transaction data automatically. This sets the stage for more stringent tax compliance measures leading up to CARF’s inaugural global information exchange in 2027.
Overview of the Cryptoasset Reporting Framework (CARF)
The CARF, established by the Organisation for Economic Co-operation and Development (OECD), serves as a guideline for the automatic sharing of crypto transaction information between tax agencies worldwide. Its protocols require crypto asset service providers to:
- Undertake thorough due diligence
- Confirm user identities
- Report extensive transaction details annually
Notably, the initial focus of CARF has been primarily on cross-border transactions. Therefore, cryptocurrency activities occurring solely within the UK have, until now, escaped these automatic reporting channels, as indicated by a policy document released by HMRC on Wednesday.
Goals of the UK Government
By incorporating domestic users into CARF’s coverage, the UK government seeks to ensure that cryptocurrencies do not evolve into an asset class that eludes the transparency associated with traditional financial accounts under the Common Reporting Standard. Officials in the UK argue that this comprehensive approach will:
- Streamline the reporting process for cryptocurrency firms
- Equip tax authorities with a more robust dataset
This is vital for identifying tax evasion and fulfilling taxpayer obligations.
