UK Crypto Traders Face New Regulations Starting January

Starting in January, crypto traders in the UK will face stricter regulations and potential fines for non-compliance. The new rules, part of the Cryptoasset Reporting Framework, require users to provide identifying information to exchanges and platforms. This move is aimed at closing loopholes and capturing unpaid capital gains, with the government expecting to raise £315 million by April 2030.

The fines, which target both individual holders and non-compliant service providers, are part of a broader effort to bring digital assets under traditional financial oversight. This aligns UK regulations more closely with U.S. policy than the EU’s approach. Holders of Bitcoin, Ethereum, and other cryptocurrencies must supply accurate information to the exchanges and platforms they use for trading. Service providers that fail to report transaction details and tax reference numbers will also face penalties.

Exchequer Secretary James Murray MP emphasized that the new rules will help “crack down on tax dodgers as we close the tax gap.” The comprehensive reporting is designed to ensure that “tax dodgers have nowhere to hide” while generating revenue for essential public services including healthcare and law enforcement. The new framework is part of broader government efforts to increase tax compliance across digital asset transactions. Current UK tax rules require cryptocurrency holders to pay capital gains tax on profits, but enforcement has been limited by reporting gaps.

The timing of these measures coincides with Chancellor Rachel Reeves’s refusal to rule out future tax increases following recent welfare reform reversals. Reeves defended the government’s fiscal approach, stating, “I’m not going to apologise for making sure the numbers add up.” The tax compliance measures complement the UK’s broader cryptocurrency regulatory framework, with draft legislation published in April 2025. This brings crypto exchanges, dealers, and stablecoin issuers under traditional financial services oversight.

The regulatory approach aligns more closely with the United States than the EU’s Markets in Cryptoassets Regulation. UK authorities are extending existing financial regulations to crypto firms through phased implementation expected to be complete by 2026. The first phase focuses on stablecoins while the second phase will expand to broader cryptoasset categories and activities. Key rules and requirements are already being implemented throughout 2025.

Cryptocurrency service providers will need to implement customer data collection systems and regular reporting procedures to avoid penalties. The compliance burden may increase operational costs for smaller exchanges and trading platforms. Users trading on non-compliant platforms or failing to provide required documentation face direct financial penalties. The £300 fine structure creates clear incentives for voluntary compliance while generating revenue from non-compliant actors.

Chancellor Reeves acknowledged that recent policy reversals have been “damaging” but maintained that fiscal responsibility requires comprehensive tax collection. The new regulations are part of a broader push to bring digital assets under traditional financial oversight, ensuring that the UK’s approach to cryptocurrency aligns more closely with U.S. policy than the EU’s approach. This move is expected to raise significant revenue and close loopholes in the tax system, benefiting essential public services.