CASPs must collect all user data, but only report it for UK and CARF tax residents. Service providers will be penalized up to £300 per user for non-compliance. The UK is in line with more than 40 jurisdictions promoting crypto tax transparency.
The UK government has confirmed that it will implement new cryptographic tax data rules under the Organization for Economic Development (OECD)’s Crypto Asset Reporting Framework (CARF) in line with international standards for tax transparency.
CryptoAsset Service Providers (CASPs) operating in the UK must collect user data from 2026 and submit reports from May 2027. These changes aim to curb tax evasion, strengthen global reporting obligations, and increase accountability in the digital asset sector.
The regulations apply to all CASPs that offer exchange, transfer or storage services, even if the company is not based in the UK.
Entities must collect identity and transaction data from all users, but only report on users who are UK tax resident or jurisdictions that have adopted CARF rules.
Reporting thresholds begin on January 1, 2026
The initial reporting period covers activities from January 1st to December 31st, 2027 and is scheduled to be submitted by May 31st, 2027. Subsequent reports have an increase in deadlines each year, with each deadline dropping on May 31st.
The provider must collect data from all users, but only those eligible to reportable users (tax resident or CARF ally resident) will be included in the filing.
Reports must be submitted via HMRC’s online platform using an XML format in line with OECD guidance. The digital submission tool is not live yet, but the government plans to provide instructions ahead of the initial submission deadline.
This framework is designed to reflect reporting standards used in traditional finance, such as General Reporting Standards (CRS).
According to the OECD, the CARF framework allows tax authorities to track crypto transactions across borders in a standardized and automated way.
Crypto companies face a penalty of £300 for each violation
The HMRC has imposed severe penalties for failing to comply with the new rules. Crypto companies that do not submit reports, send them late, or include inaccurate or incomplete information may be fined up to £300 per user.
This applies to both UK-based companies and companies offering crypto services within the UK market.
Companies are encouraged to prepare their internal systems in advance so that they can gather the required user ID details and transaction overviews.
If there are no users who can report in a particular year, the penalty will not apply if they do not report it, but the data must still be collected and available for auditing.
This rule can put further compliance burden on CASPs, particularly decentralized platforms and non-mandatory wallet providers, and can struggle to verify their identity.
Industry participants further explain how regulations apply to distributed protocols or services that operate with minimal user data collection.
The UK is taking part in the global push of crypto transparency
The adoption of the UK CARF is part of a broader international effort to bridge regulatory gaps in the crypto sector. Over 40 jurisdictions, including EU countries, are committed to implementing the framework in a coordinated timeline.
The EU has already integrated the CARF into the Management Cooperation Directive (DAC8) and has been in effect since 2026.
The UK aims to enhance its credibility as a regulated but competitive jurisdiction in the crypto business by adjusting it to global standards.
This move is to increase global regulatory scrutiny of digital asset activities following the massive collapse of spaces such as FTX and Celsius.
The new obligation will not be in effect until 2026, but the HMRC is urging Cusp to begin preparations, especially those who may be collecting personal data for the first time, especially those who are first to start preparing.
Regular updates are issued by tax authorities and guidance is available via email alerts from opt-in companies and individuals.
Long-term impact on the UK crypto sector
As the UK strengthens compliance rules for its digital assets, some CASPs may choose to move or withdraw the market due to operational and economic burdens. But others see this shift as a step towards justifying the role of crypto in the financial system.
Crypto-tax data rules based on CARF could reshape the UK’s digital assets landscape, increase regulatory transparency and potentially reduce the appeal of illegal users.
Whether this will strengthen or suppress, remains unseen in innovation, but for now the message is clear. Compliance is no longer an option.
