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UK cryptocurrency exchanges and service providers will be required to report all user transactions to tax authorities starting in 2026, as Britain implements the OECD’s Cryptoasset Reporting Framework ahead of its first global data exchange in 2027.
The mandate, confirmed by HM Revenue and Customs, extends beyond cross-border transactions to include domestic crypto activity—closing a reporting gap that officials say could otherwise allow digital assets to escape the global tax information-sharing system.
Under the updated UK crypto regulation, HMRC will gain automatic visibility into user activity across both local and cross-border transactions for the first time. Officials say the expansion is designed to ensure tax compliance as digital asset usage grows across the country.
CARF, developed by the Organisation for Economic Co-operation and Development (OECD), was introduced in June 2022 and publicly released the following year. It aims to standardize global reporting for crypto transactions through automated exchanges between tax authorities. Under CARF, service providers must verify user identities, conduct background checks, and file detailed annual reports of transaction data — requirements that now sit at the core of revised UK crypto regulation.
Sources cited in an HMRC policy paper explained that CARF primarily targets cross-border transactions. Domestic activity, by contrast, was not initially within the automatic reporting scope. The decision to expand UK crypto regulation to include local transactions reflects a policy intention to prevent crypto from being treated as an “off-CRS” asset class — a reference to gaps in existing Common Reporting Standard practices where digital assets could otherwise fall outside the global information-sharing system.
UK officials argue that aligning domestic transactions with CARF rules will streamline compliance for firms and strengthen the government’s ability to detect tax noncompliance. This unified approach, they said, will offer “a more comprehensive set of data to tax authorities,” enabling improved evaluation of taxpayer obligations under the evolving framework of UK crypto regulation.
As part of its broader reform of UK crypto regulation, the government also introduced a new “no gain, no loss” mechanism designed specifically for decentralized finance (DeFi) users. The measure delays the point at which capital gains tax is triggered until the moment a user sells their tokens, offering relief to those frequently moving assets between protocols.
Industry response has been largely positive, with early feedback acknowledging that the deferral mechanism gives clearer tax treatment for an area of crypto prone to uncertainty. For market participants, the revision illustrates how UK crypto regulation is evolving to balance oversight with practical considerations for DeFi activity.
The UK’s announcement comes amid parallel moves by governments worldwide to strengthen their own reporting systems and tighten tax enforcement — an international trend that aligns with the intentions behind UK crypto regulation.
In South Korea, tax authorities intensified enforcement in October by authorizing the seizure of cryptocurrencies stored in cold wallets and conducting home searches involving hardware wallets when individuals are suspected of concealing assets.
Spain is also moving toward more aggressive taxation. Lawmakers recently proposed raising the top tax rate on crypto profits to 47%, placing digital asset earnings within the general income tax bracket. Corporate entities under the plan would pay a fixed 30% rate.
Switzerland, meanwhile, has postponed automatic data sharing on crypto transactions until 2027, despite confirming that CARF rules will be incorporated into national law on January 1. Authorities said the delay is intended to give domestic industry participants sufficient transition time while the country finalizes which jurisdictions it will share data with.
In the United States, Representative Warren Davidson introduced the Bitcoin for America Act in November. The proposal would allow federal taxes to be paid directly in Bitcoin, with payments transferred into a national BTC reserve. Under the bill, Bitcoin used for tax settlement would not be treated as a gain or loss — an approach that loosely mirrors the UK’s “no gain, no loss” plan but does not directly impact UK crypto regulation.
With the implementation timeline approaching, platforms operating in the UK now face an expanded compliance burden. The upcoming changes to UK crypto regulation will reshape the way exchanges, wallet providers, and DeFi platforms manage user data, verify identities, and report activity.
For policymakers, the 2026 deadline marks a foundational step toward global crypto tax transparency. For investors, the shift reinforces a long-term trend: UK crypto regulation is tightening, standardizing, and aligning with international norms — setting the stage for the most comprehensive crypto reporting environment the country has seen.
