New Domestic Regulations for Crypto Transaction Reporting
The United Kingdom is set to impose new reporting requirements on domestic cryptocurrency platforms starting in 2026, marking a significant step toward increased regulatory oversight. This move expands the scope of the current Cryptoasset Reporting Framework (CARF), enabling HM Revenue & Customs (HMRC) to access comprehensive transaction data from both local and international sources for UK-resident users. The updated framework aims to bolster tax compliance and curb illicit activity in digital assets ahead of its scheduled international data exchange in 2027.
Key Developments in Crypto Regulatory Oversight
- •UK authorities will require crypto service providers to perform due diligence, verify identities, and report detailed transaction data annually, aligning domestic reporting with global standards.
- •The expansion aims to prevent cryptocurrencies from becoming an “off-CRS” asset class, which would allow activity to evade traditional tax reporting standards like the Common Reporting Standard.
- •The move is part of broader efforts by various governments worldwide to tighten oversight of digital assets and facilitate international cooperation against tax evasion.
- •UK officials emphasize that the unified approach will simplify compliance for crypto companies while providing tax authorities with a more complete dataset to identify non-compliance and enforce obligations.
In addition to expanding its reporting scope, the UK introduced a “no gain, no loss” tax framework for DeFi users, which defers capital gains until tokens are sold. This approach has received favorable feedback from the local industry, signaling a shift towards a more nuanced taxation model for crypto assets.
Global Trend Toward Crypto Tax Enforcement
Worldwide, governments are intensifying their efforts to regulate and monitor digital assets. For instance, South Korea’s National Tax Service announced plans to seize crypto assets stored in cold wallets and conduct home searches for hardware devices suspected of harboring concealed holdings. Similarly, Spain’s Parliament proposed increasing the top tax rate on crypto gains to 47%, aiming to incorporate digital asset profits into broader income categories.
Switzerland has postponed the start of its automatic crypto information exchange with foreign tax authorities until 2027, pending a review of potential partner countries. The upcoming CARF rules will still be enacted on January 1, with transitional measures introduced for domestic firms.
Meanwhile, in the United States, Congressman Warren Davidson has introduced legislation proposing that Americans could pay federal taxes using Bitcoin, with these payments funneled into a national BTC reserve. The bill, known as the Bitcoin for America Act, also seeks to exempt such bitcoin payments from capital gains taxes, treating the transferred crypto as neither a gain nor a loss.