UK Government Requests Crypto Companies to Gather User Information Starting in 2026, Significant Penalties for Inaccurate Reporting

The UK has been enacting a series of successive reforms concerning cryptocurrencies via HM Revenue and Customs (HMRC). The government has rolled out yet another extensive regulatory initiative, influenced by the endorsement of the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework (CARF). Commencing on 1 January 2026, all digital currency firms will be required to gather and reveal in-depth user and transaction information.

“Starting 1 January 2026, if you offer cryptoasset services in the UK, you will have new obligations to gather data and report it to HMRC,” the update on 14 May 2025 stated.

Every provider of cryptoasset services, whether UK-based or foreign platforms servicing UK users, must collect and report comprehensive data regarding each user and every transaction. This includes address, country of residence, national insurance number, unique taxpayer reference, and additional details.

The UK is set to mandate crypto companies to report all user transactions starting January 2026

Failing to comply may incur a charge of £300 per user

Actually, regulation could cost even more given current expenses

KYC and AML pose challenges for crypto pic.twitter.com/uQU1Lbnupb

— Tall (@tall_data) May 18, 2025

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Substantial Charges for Non-Compliance

Neglecting to follow the new regulations put forth by the UK government, or submitting inaccurate or incomplete information, may subject firms to hefty penalties. HMRC has established fines of up to £300 per user for incorrect reporting, a sum that could increase rapidly for platforms with extensive user bases.

The UK government aims to improve tax crypto law and tackle illegal activities. Furthermore, it seeks to synchronize crypto regulation with traditional banking practices. To achieve this, companies must report the transaction value, type of cryptoasset, such as BTC, Ethereum, and others.

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UK Chooses to Follow US Lead on Crypto Regulation Over EU

In response to concerns about falling behind global fintech centers, the UK has released new draft rules for the cryptocurrency sector.

On 29 April 2025, Finance Minister Rachel Reeves stated, “With our Plan for Change, we are making Britain the premier destination for innovation and the safest environment for consumers. Strong regulations surrounding crypto will enhance trader confidence, foster Fintech growth, and ensure safety for individuals across the UK.”

The government is moving forward with obligatory regulations for crypto exchanges, dealers, and representatives.

Significantly, the UK has opted to align its crypto regulations with those of the US, categorizing crypto assets as securities. This represents a shift from the EU’s Markets in Crypto-Assets (MiCA) framework, which was implemented in December 2024.

“The Chancellor also noted that the UK and US will utilize the forthcoming UK – US Financial Regulatory Working Group to maintain dialogue supporting the usage and responsible development of digital assets,” the UK government website stated.

The administration aims to conclude the legislation by the end of 2025.

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