UK Mandates Crypto Firms to Report Customer Data from 2026

The UK has announced a significant regulatory change in the cryptocurrency sector, mandating that all crypto firms must collect and report detailed customer information on every trade and transfer starting from January 1, 2026. This move is part of a broader effort to enhance tax compliance and oversight within the digital asset industry.

According to a statement from HM Revenue and Customs (HMRC) released on May 14, the new regulations will require platforms to record comprehensive details for all users, including full names, home addresses, and tax identification numbers. Each transaction will also need to be logged with specifics such as the type of cryptocurrency used and the amount transferred.

The reporting obligations extend beyond individual users to encompass companies, trusts, and charities involved in crypto activities. Firms that fail to comply with these regulations or submit inaccurate data may face penalties of up to £300 per user. Authorities have indicated that additional guidance will be provided in the coming months, but they are urging businesses to start preparing for these changes immediately.

These regulatory changes align with the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework, which aims to standardize tax reporting obligations across different jurisdictions. The UK’s adoption of this framework underscores its commitment to bringing the crypto sector under stricter oversight.

Chancellor of the Exchequer Rachel Reeves emphasized the UK’s stance on fraud and abuse in the crypto sector, stating, “The UK is open for business — but closed to fraud, abuse, and instability.” The proposed legislation is designed to combat scams and fraud while enhancing consumer protection and boosting confidence in the sector.

The policy shift comes at a time when crypto adoption in the UK is on the rise. A study by the Financial Conduct Authority (FCA) from November 2024 revealed that 12% of UK adults held crypto assets, a significant increase from just 4% in 2021. This growing adoption highlights the need for robust regulatory measures to ensure the integrity and stability of the digital asset market.

The UK’s approach to crypto regulation differs from the European Union’s Markets in Crypto-Assets (MiCA) regulation. While MiCA imposes stricter rules on stablecoin issuers, including volume limits, the UK has opted for a more flexible framework. Foreign stablecoin issuers will be allowed to operate without registration, and no cap will be imposed on transaction volumes, providing greater flexibility for innovation.

Earlier this year, a coalition of leading UK trade associations called on the government to appoint a special envoy for crypto and develop a comprehensive action plan to support the digital assets and blockchain sector. In a letter addressed to Varun Chandra, the Prime Minister’s special adviser on business and investment, six UK digital economy organizations emphasized the need for stronger strategic alignment to unlock investment, growth, and job creation within the crypto industry.

In September 2024, the UK government introduced a new bill aimed at clarifying the status of digital assets, including non-fungible tokens (NFTs), cryptocurrencies, and carbon credits, as “things” and “personal property” under the nation’s property laws. This move is part of the UK’s broader efforts to ramp up regulatory measures following some high-profile bankruptcies in the crypto sector.

The FCA oversees crypto activities, focusing on anti-money laundering measures and consumer protection. The new regulations are expected to enhance transparency and accountability in the crypto sector, fostering a more secure and trustworthy environment for investors and users alike.