UK Crypto Users Face New ID Rules From 2026

Starting from January 2026, the UK's tax authority, HM Revenue and Customs (HMRC), will implement new regulations requiring cryptocurrency users to provide personal identification details to their crypto service providers. This move is aimed at curbing tax evasion and criminal activities within the cryptocurrency sector. Under the new rules, users will need to share their full name, date of birth, home address, and a National Insurance number (or a similar tax ID) with their crypto providers. This information may be reported to HMRC, and failure to comply could result in penalties for both users and service providers.

The new regulations apply to anyone buying, selling, exchanging, or transferring crypto assets within the UK. Crypto firms must collect and verify this information for every customer, and those who fail to do so could face fines of up to $407 per user who lacks complete Know-Your-Customer (KYC) data. Individual users may also face penalties for failing to provide their full information. The HMRC has warned that providing inaccurate details or failing to provide the necessary information could result in a penalty of up to $407.

The new system will also allow HMRC to track profits from crypto trades more easily. Crypto profits exceeding $4,079 per year are taxable in the UK, with tax rates depending on the individual’s income level. This move is part of the UK’s broader effort to bring the crypto market under proper financial regulation. Officials say the new rules will make it more difficult for criminals to use cryptocurrency to conceal illicit income and easier for the government to collect unpaid taxes.

The UK is not alone in its push for stronger identity checks in crypto. Many countries require KYC to stop money laundering and terrorist financing. It ensures users open real-name accounts and complete verification before they can trade or withdraw funds. As the crypto industry grows, governments worldwide are cracking down on KYC violations to protect financial systems and reduce crime.

Although crypto platforms will not submit their first reports to HMRC until May 2027, they will begin collecting user data from January 2026. This means that users and crypto firms now have until early 2026 to get their data and systems in order, or face tough financial consequences. The HMRC has also announced that UK-based holders of cryptoassets will have to provide personal details to crypto service providers or face penalties of up to £300 from HMRC.

This regulatory shift underscores the UK's commitment to integrating the cryptocurrency sector into its financial framework, ensuring compliance with tax laws and reducing the potential for illicit activities. The new requirements will not only enhance transparency but also provide a clearer path for tax collection from crypto-related profits, aligning the digital asset market with traditional financial regulations.