The United Kingdom is preparing to take an important step to monitor the cryptocurrency market more closely. HMRC, the tax authority affiliated with the Treasury, is working on a new regulation that will require all crypto platforms in the country to report user transactions in detail as of 2026. This decision is considered the UK’s most comprehensive crypto reporting move yet. The aim is to prevent tax losses by monitoring both domestic and international crypto movements under one roof.
Local Transactions Are Also Included
The new system will be implemented in the UK as an expanded version of the Crypto Asset Reporting Framework (CARF) developed by the Organization for Economic Co-operation and Development (OECD). The government, which is preparing for the global data sharing process that will start in 2027, aims to increase transparency and remove crypto assets from being an “out of control” area with this move.
CARF was originally designed to provide standard reporting of cross-border crypto transactions across countries. However, the UK is not content with just international transactions and has decided to include the transactions of domestic users as well. Authorities emphasize that this step will prevent crypto assets from being excluded from the Common Reporting Standard (CRS).
Under the new regulation, crypto service providers will have to verify users’ identities, carry out background checks and submit detailed transaction reports to HMRC every year. Even if not all transactions are included in the global automatic data sharing, all transfers within the UK will be tracked through the national reporting system. The government argues that this method will make it easier to detect tax evasion while simplifying reporting for companies.
This development also coincides with HMRC’s recent warnings to crypto investors more frequently about taxes. Authorities state that there is a significant tax loss, especially due to undeclared earnings, and this gap can be largely closed with the new system.
“No Gain, No Loss” System and Reactions from the Industry
Concurrent with the CARF expansion, the government also announced a new tax mechanism for decentralized finance (DeFi) users, dubbed “no gain, no loss.” Accordingly, investors will not pay capital gains tax as long as they hold their tokens, and tax liability will arise only during the disposal of assets. It was announced that most of the sector representatives who participated in the consultation process were positive about this regulation.
On the other hand, the increase in regulatory pressures brought criticism in the sector. Some industry representatives argue that the promotion and compliance rules imposed by the Financial Conduct Authority (FCA), especially for stablecoins, are too strict. It is stated that long audit processes, waiting times and risk classifications negatively affect the user experience.
On the other hand, unlike the UK, new steps regarding crypto taxation are on the agenda in the USA. It has recently been revealed to the public that the US Internal Revenue Service (IRS) is working on draft studies to include transactions made through decentralized exchanges in the tax reporting system. This shows that the crypto market on a global scale is now under stricter financial control.
