The UK will require domestic crypto exchanges to report transactions by local residents from next year as it plugs a gap in reporting rules.
This change will grant His Majesty’s Revenue and Customs (HMRC), the tax authority, access to domestic and cross-border crypto transaction data for the first time.
CARF to Roll Out in 2027
The upcoming requirement will expand the scope of the Cryptoasset Reporting Framework (CARF), a cross-border reporting framework developed by the Organisation for Economic Co-operation and Development (OECD).
The CARF framework facilitates the sharing of information between tax authorities globally. It mandates that crypto asset service providers conduct due diligence, verify user identities, and submit detailed transaction information on an annual basis.
The first global information exchange under CARF is scheduled to occur in 2027.
UK Aims to Prevent Crypto Escaping Common Reporting Standard
As CARF is a cross-border framework, crypto transactions occurring solely within the UK would have previously fallen outside of automatic reporting channels, according to a policy paper released by HMRC this week.
The objective behind extending CARF's scope to include domestic users is to prevent cryptocurrency from becoming an "off-CRS" asset class, thereby avoiding the visibility applied to traditional financial accounts under the Common Reporting Standard.
UK officials have also stated that by broadening CARF's scope to cover domestic activity, tax authorities will gain access to a more comprehensive dataset. This will enable them to identify non-compliance more effectively and better assess taxpayer obligations.
UK Proposes “No Gains, No Loss” Tax Rule for DeFi
The reporting change and the expansion of CARF's scope in the UK follow closely after HMRC signaled its support for a “no gain, no loss” (NGNL) approach to crypto lending and liquidity pool arrangements earlier this week.
Currently, when a decentralized finance (DeFi) user deposits funds into a protocol, even if the intention is to monetize those funds or secure a loan against them, the action could be treated as a disposal, triggering capital gains tax. The proposed NGNL approach could defer capital gains tax until a genuine economic disposal occurs.
HMRC has published its consultation outcome in the UK regarding the taxation of DeFi activities related to lending and staking.
A particularly interesting conclusion is that when users deposit assets into Aave, the deposit itself is not treated as a disposal for capital gains…
— Stani.eth (@StaniKulechov) November 27, 2025
In practical terms, the NGNL proposal suggests that users who deposit crypto into lending protocols, or contribute assets to automated market makers, would no longer face taxation at the point of deposit. Instead, tax would only be applied when they eventually sell or trade their assets in a manner that realizes either a gain or a loss.
This proposal aims to align tax rules with the actual functioning of DeFi. It is also intended to reduce administrative burdens and prevent tax outcomes that do not accurately reflect the economic reality of certain activities within the DeFi space.
The NGNL approach would also extend to multi-token arrangements commonly used in decentralized protocols, which can be intricate. For example, if a user receives more tokens back than they initially deposited, the gain would be subject to tax. Conversely, if the user receives fewer tokens than they deposited, the transaction would be treated as a loss.