UK to require crypto firms to report every customer transaction

The United Kingdom is bolstering its cryptocurrency regulatory framework to enhance tax reporting and combat illicit activities. Starting January 1, 2026, UK-based cryptocurrency companies will be mandated to collect and report comprehensive data on every customer trade and transfer. This requirement, stemming from the UK Revenue and Customs department, mandates the collection and reporting of extensive user information for each transaction. This includes the full name, home address, tax identification number, the specific cryptocurrency involved, and the transaction amount. Details concerning companies, trusts, and charities engaging in cryptocurrency transactions will also be subject to reporting.

Non-compliance or inaccurate reporting will result in penalties of up to £300 per user. While official guidance on compliance procedures will be issued later, authorities urge companies to begin data collection immediately to ensure preparedness. This initiative aligns with the UK’s adoption of the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework, aiming for increased transparency in crypto tax reporting. The overarching goal is to establish a robust regulatory environment that fosters industry growth while safeguarding consumer interests.

This regulatory push complements a draft bill introduced by UK Chancellor Rachel Reeves, aiming to bring crypto exchanges, custodians, and broker-dealers under stricter regulatory oversight to prevent scams and fraud. Reeves emphasized the UK’s commitment to fostering a business-friendly environment while simultaneously combating illicit activities. A Financial Conduct Authority study revealed a substantial increase in UK cryptocurrency ownership, from 4% in 2021 to 12% in 2024, highlighting the need for enhanced regulatory measures.

The UK’s approach differs significantly from the European Union’s Markets in Crypto-Assets (MiCA) Regulation. A key divergence lies in the UK’s allowance of foreign stablecoin issuers to operate without registration and the absence of volume caps on stablecoins, unlike the EU’s approach which incorporates controls to mitigate systemic risks. This contrast underscores the varied strategies adopted by different jurisdictions in navigating the evolving landscape of cryptocurrency regulation.