UK Mandates Crypto Firms to Report User Data from 2026

Starting from January 1, 2026, cryptocurrency companies operating in the UK will be required to collect and report detailed user and transaction data. This new rule, introduced by the UK tax authority, is part of the adoption of the Crypto Asset Reporting Framework (CARF), a global standard aimed at combating tax evasion and bringing transparency to the crypto industry in line with the banking system.

Under the new rule, crypto platforms must identify each user and record their legal identity information, address, and taxpayer identification number. Additionally, platforms must also record every transaction involving UK users or users from other CARF-participating countries, including details such as transaction amount, asset type, quantity, and nature of the transfer. These requirements also apply to overseas companies serving UK customers. If the reporting information is inaccurate or incomplete, each user can be fined up to £300.

This move by the UK tax authority is a significant step towards integrating the crypto industry into the traditional financial system. By requiring detailed reporting of user and transaction data, the UK aims to enhance transparency and accountability within the crypto space. This will not only help in combating tax evasion but also in ensuring that the crypto industry operates within the same regulatory framework as the banking system.

The implementation of CARF in the UK is expected to have a profound impact on the crypto industry. Companies will need to invest in robust systems to collect and report the required data accurately. This could lead to increased operational costs for crypto platforms, but it will also help in building trust among users and regulators. The new rule will also ensure that users are aware of their tax obligations and comply with the regulations, thereby reducing the risk of tax evasion.

Overall, the new rule is a positive development for the crypto industry. It will help in bringing the industry into the mainstream and ensure that it operates within a transparent and accountable framework. The UK's adoption of CARF is a significant step towards achieving this goal and sets a precedent for other countries to follow.