UK Mandates Domestic Crypto Transaction Reporting
The United Kingdom plans to require domestic crypto platforms to report all transactions made by UK-resident clients beginning in 2026.
This move will significantly expand the scope of the Cryptoasset Reporting Framework, known as CARF, and will give the UK’s tax authority — HMRC — automatic access to domestic and international crypto data for the first time.
The adjustment comes ahead of CARF’s first global information exchange, scheduled for 2027, and forms part of a wider effort to bring digital asset activity into alignment with existing tax-compliance systems.
Closing the Gap Left by Cross-Border Rules
CARF was designed as a global standard for exchanging crypto transaction information between tax authorities.
The framework requires crypto service providers to verify customer identities, conduct due diligence, and submit annual transaction reports.
However, CARF’s original structure focused primarily on cross-border activities.
As a result, UK-based transactions occurring entirely within the country would not automatically be shared with HMRC under global exchange rules.
By expanding CARF to include domestic users, UK officials aim to prevent crypto from becoming an asset class that escapes oversight under the Common Reporting Standard.
They also say the change will help streamline compliance for companies by ensuring they follow one unified reporting system for both domestic and international transactions.
New Tax Proposal for DeFi Users
Alongside the expanded reporting requirements, UK authorities also proposed a new “no gain, no loss” tax rule designed specifically for decentralised finance users.
Under this system, capital gains liabilities would be deferred until the underlying tokens are ultimately sold.
Many industry participants have welcomed the proposal, interpreting it as a more accurate approach to accounting for the economic reality of DeFi transactions.
The change could reduce the administrative burden on both users and regulators by shifting taxation away from interim transactions.
Crypto Tax Oversight Grows Globally
Governments worldwide are stepping up efforts to ensure that crypto taxation frameworks match the accelerating adoption of digital assets.
In South Korea, tax authorities have stated they are prepared to seize crypto stored in cold wallets and conduct searches for hardware devices if they suspect hidden holdings.
Spain’s lawmakers have proposed raising the top tax rate on crypto gains to 47%, while also adjusting how profits are categorised for individuals and corporations.
Switzerland recently confirmed that it will delay the start of its automatic crypto-information exchange until 2027 as it evaluates which countries to include in its exchange group.
In the United States, a new legislative proposal titled the Bitcoin for America Act would allow federal tax payments to be made in Bitcoin.
The bill would treat these payments as neither gains nor losses, removing capital-gains implications for taxpayers sending BTC to the government.
Industry Faces Increasing Regulatory Pressure
The UK’s decision to bring domestic crypto activity into the CARF system reflects a broader trend of governments working to close regulatory gaps before digital assets become more deeply integrated into financial infrastructure.
The expanded rules will require platforms to collect detailed personal and transactional data from users, ultimately giving HMRC far greater visibility into crypto-related behaviour.
With global tax authorities adopting similar strategies, crypto platforms operating in multiple jurisdictions are preparing for significantly higher compliance workloads over the next several years.