Reporting To HMRC - Crypto-Asset Reporting Framework (CARF) Begins

1st January 2026

From 1 January 2026, the UK has begun implementation of the OECD's Crypto-Asset Reporting Framework (CARF).

Under these rules, cryptocurrency exchanges and service providers must collect detailed user and transaction information (e.g., personal ID, tax numbers, buys/sells, gains/losses) and prepare to report this to HM Revenue & Customs (HMRC).

The first official reporting to HMRC will typically occur in 2027 covering the 2026 tax year.

2) What Must Be Reported

Platforms must collect and verify customer data including:
• full name, address, date of birth
• tax residency and taxpayer identifier (e.g., UK National Insurance/tax reference)
• all transaction details (type, asset, amount, date, value)

3) Penalties & Enforcement

Failure to supply required information may trigger fines — often cited up to about £300 per user for missing or inaccurate data.

HMRC is actively stepping up enforcement, including tax notices to those who under-reported crypto gains.

4) Broader Compliance Impact

These changes are aimed at cracking down on tax evasion and financial secrecy using crypto. HMRC will eventually share information with other countries under CARF.

Crypto gains (e.g., from selling BTC, ETH) are taxable events in the UK and must be included in self-assessment returns as normal capital gains.

Global Developments - OECD CARF & DAC8

OECD Crypto-Asset Reporting Framework (CARF)

CARF is a global tax transparency standard developed by the OECD and G20 to make tax data on crypto assets available to tax authorities worldwide.

Effective from 1 January 2026 in many jurisdictions, platforms must begin collecting data (reports typically filed in 2027).

Participating countries include the UK, EU member states, Switzerland, South Africa, Uganda, Cayman Islands, and others.

European Union - DAC8 Directive

The EU's DAC8 (Directive on Administrative Cooperation, amendment) complements CARF and likewise requires crypto intermediaries to start collecting transaction and client data from 1 January 2026.

Reporting to national EU tax authorities must be submitted after the end of year (often within ~9 months).

Note: DAC8 often captures entities outside the EU that serve EU tax residents, so global crypto brokers may be in scope.

Switzerland

Switzerland is among the jurisdictions implementing CARF rules from 1 January 2026, requiring crypto-asset service providers to collect and prepare data under the framework.

United States

The US is expected to follow CARF-style reporting later (likely from 2027) — while some federal bills (e.g., stablecoin and crypto market structure proposals) remain under negotiation.
Blockpit

Japan

Japan has been building out its crypto regulatory framework including AML/KYC rules and stablecoin issuer licencing. These do not specifically begin on 1 Jan 2026 but reflect broader regulatory tightening.

Key Themes in 2026 Crypto Regulation

1) Transparency & Tax Compliance

Across OECD, EU, UK and other jurisdictions, there is a clear move to treat crypto like other financial assets for tax purposes, significantly lifting reporting obligations for platforms and users.

2) Data Collection Across Borders

International information exchange (via CARF/DAC8) aims to limit tax evasion by enabling automatic sharing between countries.

3) Global Implementation Timelines

Jan 1, 2026: Start of data collection obligations in UK, EU, Switzerland, others.

2027: First official data reporting submissions.

Later (2027-29): Wider CARF participation by additional jurisdictions, possibly including the US.

What This Means

If you trade or hold crypto:

Expect increased onboarding KYC requirements.

Exchanges will keep detailed records and report them to tax agencies.

You must accurately declare crypto profits/losses on tax returns (e.g., in the UK through self-assessment) or face penalties.

If you run a crypto business:

Prepare systems for CARF/DAC8 data collection from 2026 and reporting in 2027.

Even non-EU/UK platforms with customers in these regions may be in scope.

The United Kingdom's Cryptocurrency Regulatory Framework in 2026

Introduction

As of 1 January 2026, the United Kingdom has implemented a significant shift in the regulatory landscape for crypto-assets. This change is not primarily about introducing new taxes, but rather about vastly expanding tax reporting and transparency obligations for crypto users and the platforms that serve them. Central to this transformation is the Crypto-Asset Reporting Framework (CARF), an international standard supported by the Organisation for Economic Co-operation and Development (OECD) that the UK has incorporated into its domestic law.

The Rationale Behind New Rules

The UK government and HM Revenue & Customs (HMRC) have long been concerned that the rapid growth of crypto-asset adoption has outpaced the capacity of existing tax and regulatory frameworks to ensure compliance. Historically, many crypto-asset transactions went unreported, leading to under-declared gains and tax revenue losses. By adopting CARF and extending its application domestically, the UK aims to bring crypto-assets squarely within the same transparency and reporting regimes that already apply to traditional financial assets.

Key Elements of the New Regulatory Regime
1. Mandatory Data Collection and Reporting (CARF Implementation)

From 1 January 2026, reporting crypto-asset service providers (RCASPs) — including exchanges, brokers, and similar platforms — must begin collecting detailed information on both users and their transactions. The information to be gathered includes:

User identity details (e.g., full name, address, tax identification number)

Transaction summaries (e.g., type of crypto, type of transaction, transaction value, number of units)

This data must be verified using due diligence procedures and will form the basis of reports submitted to HMRC.

Crucially, the UK has extended these requirements to domestic reporting — meaning that not only international data exchanges but also UK-resident user data must be reported to HMRC under the same regime.

2. Reporting Deadlines

Although data collection begins at the start of 2026, the first formal report to HMRC is not due until 31 May 2027. This report will cover all collectible information from 1 January to 31 December 2026. Thereafter, reports will be submitted annually by the end of May each year for the preceding calendar year's activity.

3. Penalties and Compliance Risks

To ensure compliance, HMRC has attached penalties for non-compliance:

If a provider fails to collect complete or accurate information, or fails to report it properly, HMRC may impose fines — typically up to £300 per user impacted.

Additionally, users themselves bear indirect risk if they withhold required details or fail to provide correct tax residency information to each platform they use.

Distinguishing Reporting From Taxation

A critical point in understanding the UK position is recognising what CARF does and does not do:

CARF does not itself impose new taxes on crypto activity — it standardises information collection and reporting so that tax authorities can enforce existing tax laws more effectively.

Existing UK tax rules still govern liability: crypto disposals trigger capital gains tax, while certain income-like events (such as mining, staking rewards, or airdrops) can trigger income tax and National Insurance contributions. HMRC’s goal is to better link crypto activity to individual tax records so that these liabilities are met.

Broader Impacts on Markets and Investors

The new regime is intended to:

Enhance tax transparency: By aligning with the OECD’s global standards, UK regulators can share and receive data with other jurisdictions participating in CARF, reducing the ability of investors to avoid reporting by using offshore platforms.

Strengthen regulatory credibility: Bringing crypto into mainstream reporting regimes positions the UK as a jurisdiction that balances innovation with robust compliance.

Encourage accurate self-assessment: With more data flowing to HMRC, individual taxpayers are under greater pressure to declare their crypto gains and losses correctly each tax year.

Challenges and Industry Response

The implementation of these rules poses operational challenges for both platforms and users:

Platforms must upgrade onboarding systems, due diligence processes, and reporting infrastructure to comply with CARF and domestic requirements.

Users must ensure that they keep up-to-date personal and tax information with each platform they transact on.

Many industry stakeholders have called for additional clarity and transitional guidance to ensure that providers have sufficient time and resources to adapt.

In summary, the UK’s regulatory stance on cryptocurrencies as of 1 January 2026 represents a significant maturation of the legal and tax framework governing digital assets. Rather than creating new forms of taxation, the UK has focused on aligning crypto-asset reporting with international standards, thereby bolstering transparency and enforcement of existing tax laws. This reflects a broader governmental priority: ensuring that digital asset markets are integrated into the regulated financial system, reduce opportunities for tax evasion, and protect both the public purse and public confidence in emerging financial technologies.

Estimated Number of UK Crypto Users

About 7 million adults in the UK own cryptoassets, according to the Financial Conduct Authority (FCA)’s consumer research — this represents roughly 12 % of UK adults as of late 2024.

This figure is up from around 10 % (about 5 million) in 2022, showing growth in adoption over the previous few years.

Trends in 2025

Recent polls (e.g., YouGov data referenced by the FCA) suggest crypto ownership may have declined to around 8 % in 2025, which would be about 4.5 million adults, though methodologies differ between surveys.

What This Means

"Owning" crypto means holding any digital assets like Bitcoin, Ethereum, etc. — it doesn’t necessarily mean actively trading them, but these figures include people who have bought and held crypto.

Ownership levels can vary depending on the survey and how “ownership” is defined (e.g., ever owned vs. currently holding).

Across different data sources, estimates for the number of UK adults with crypto range from about 8 % to 12 % of the adult population, i.e., roughly 4.5 million to 7 million people.