Starting January 1, 2026, the United Kingdom will enforce new reporting requirements on cryptoasset service providers (CASPs) as part of its adoption of the OECD’s Crypto-Asset Reporting Framework (CARF). This initiative, led by HM Revenue & Customs (HMRC), aims to boost tax transparency and combat tax evasion involving digital assets by requiring firms to collect and report detailed data on customer transactions.
Background and Purpose
The CARF was developed by the Organisation for Economic Co-operation and Development (OECD) to provide a standardized approach for the automatic exchange of tax information related to cryptoassets. In alignment with this international standard, the UK’s adoption of CARF introduces a significant compliance shift for crypto businesses operating within its jurisdiction. These changes are designed to close the information gap that often allows crypto investors to underreport gains or avoid taxes entirely.
Who Must Report?
Under the new rules, any business that qualifies as a Relevant Cryptoasset Service Provider (RCASP) will be required to report. This includes companies that:
- Execute cryptoasset transactions on behalf of customers,
- Provide platforms where users can trade or exchange cryptoassets.
An RCASP is considered UK-based if it is tax resident, incorporated, centrally managed, or maintains a branch in the UK. These firms will be legally obligated to report certain information to HMRC on an annual basis.
Data Collection Requirements
Beginning January 1, 2026, RCASPs must start collecting two main categories of information:
- User Information:
- Full name
- Address
- Date of birth
- National Insurance number (or a foreign tax identification number if the user is non-UK)
- Transaction Data:
- Type and value of cryptoasset
- Number of units
- Nature of the transaction (e.g., buy, sell, swap)
All data must be collected through a due diligence process that ensures accuracy and compliance with the regulations.
Reporting Timelines and Format
The first reporting deadline is May 31, 2027, covering the 2026 calendar year. RCASPs must submit the information to HMRC through an online portal, using a standardized XML format. The system is being developed and further technical guidance is expected closer to implementation.
Importantly, firms will only need to report on users who are tax residents in the UK or in other jurisdictions that have also adopted the CARF. If no such users are recorded during the reporting year, the RCASP is not required to submit a “nil report.”
Compliance and Penalties
Non-compliance with these obligations can result in significant penalties. HMRC may impose fines of up to £300 per user for:
- Failing to report,
- Submitting late reports,
- Providing inaccurate or incomplete data,
- Failing to verify user identities.
These penalties underline the seriousness with which HMRC is approaching cryptoasset taxation and enforcement.
Implications for Users and the Industry
For individuals using cryptoasset services in the UK, this means increased transparency. Users will be required to provide more personal information when signing up for or transacting on platforms. Additionally, users’ data may be shared with foreign tax authorities under automatic exchange agreements if they are resident in CARF-participating countries.
For the crypto industry, the new framework represents a step towards clarify, although it could be seen as an operational burden for some. Firms must ensure that they have systems in place to collect, store, and report data accurately. Despite these hurdles, the rules bring much-needed standardisation and legitimacy to a sector often criticised for its opacity.
Conclusion
The UK’s implementation of the CARF is a major step in bringing the crypto economy in line with traditional financial reporting standards. By mandating that service providers collect and disclose detailed transaction and user data, HMRC aims to tighten oversight, close the tax gap, and align the UK with global efforts to regulate digital assets. Firms operating in this space should begin preparing now to ensure compliance ahead of the 2026 rollout.