UK Mandates Crypto Firms to Report User Data by 2026

The UK government has announced a significant regulatory shift for the cryptocurrency industry, mandating that all crypto asset companies operating within the country must report detailed user and transaction data starting from January 1, 2026. This new regulation aims to enhance transparency and accountability within the crypto sector, aligning it more closely with traditional financial standards. Under the Crypto Asset Reporting Framework (CARF), crypto platforms will be required to identify each user and record their legal identity information, address, and taxpayer identification number. This includes logging the amount transferred, the type of asset, and the purpose of each transaction.

The new rules are part of a broader effort to curb tax evasion and improve the overall management of cryptocurrencies. Companies that fail to comply with these regulations face penalties of up to £300 per user for faulty or missing data. The UK government is encouraging crypto firms to start collecting this information ahead of the 2026 deadline to ensure a smooth transition when the law comes into effect. This proactive approach is intended to protect consumers and foster growth in the fintech sector.

The Chancellor, Rachel Reeves, has emphasized the importance of these regulations in balancing technological growth with consumer safety. The UK plans to introduce a joint testing area with the United States for digital assets, allowing both countries to experiment with new approaches and develop stricter rules for digital finance. This collaboration aims to strengthen international cooperation and set a global standard for responsible digital finance regulation.

The new regulations are designed to treat crypto activities and tax rules similarly to traditional banking services, ensuring that the digital finance sector operates with the same level of transparency and accountability. By aligning crypto regulations with traditional financial standards, the government aims to foster fintech growth while ensuring greater security and compliance. This approach is expected to enhance trust in the digital finance sector and position the UK as a leader in responsible digital finance regulation.

This move by the UK government reflects a broader effort to integrate the Organisation for Economic Development’s Cryptoasset Reporting Framework, which aims to improve transparency in crypto tax reporting. The changes are part of the UK’s strategy to establish a more robust regulatory framework that supports industry growth while ensuring consumer protection. The UK’s approach contrasts with the European Union’s Markets in Crypto-Assets Regulation framework, which imposes stricter controls on stablecoin issuers to manage systemic risks. The UK will allow foreign stablecoin issuers to operate without needing to register, and there will be no cap on stablecoin volumes.