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New regulations requiring UK cryptocurrency investors to share account details or face penalties have come into effect on January 1st.
The measure, implemented by the UK’s tax authority, aims to ensure comprehensive tax compliance on cryptocurrency transactions, including capital gains tax obligations.
HM Revenue & Customs (HMRC) will now automatically gather information on users of cryptocurrency exchanges – central to the industry – to recoup potentially tens of millions in unpaid taxes.
This development coincides with the Financial Conduct Authority’s ongoing consultation regarding stricter industry oversight, including measures targeting insider trading.
Bitcoin, often considered a benchmark for the cryptocurrency market, experienced significant volatility in 2025, surging from approximately $93,500 (£69,500) at the start of the year to nearly $124,500 before declining to below $90,000 by year-end.
Investors who capitalized on these fluctuations through strategic buying and selling are subject to taxation, though authorities have historically faced challenges in enforcement, according to Dawn Register, a tax dispute resolution partner at BDO.
“HMRC has been concerned for some time about high levels of non-compliance among crypto investors,” she stated.
The incoming regulations are designed to curb tax avoidance by providing authorities with enhanced visibility into cryptocurrency users and their transaction history.
Cryptocurrency exchanges, which facilitate the exchange of traditional currency for virtual coins, are now mandated to provide accurate and up-to-date account information for all users.
Failure to comply may result in financial penalties.
These Cryptoasset Reporting Framework (CARF) regulations are being adopted in numerous countries, promoting international collaboration between tax authorities in information sharing.
HMRC estimates substantial unpaid tax liabilities among UK crypto owners and anticipates recovering at least £300 million over the next five years through these new measures.
Ms. Register advises that individuals who realized crypto gains during the 2024-25 financial year may be required to file a tax return by January 31st, utilizing a dedicated section within the self-assessment form.
“HMRC is also looking to encourage voluntary disclosure where people have unpaid tax in earlier years and want to correct their affairs,” she added.
“HMRC is running a disclosure facility where taxpayers can come clean on undeclared gains and unpaid tax prior to April 2024.”
Concurrently, the Financial Conduct Authority is conducting a public consultation, concluding on February 12th, regarding further proposed crypto regulations. These include standards for crypto exchanges, enhanced broker responsibilities, and guidelines for crypto lending and borrowing activities.
Commenting on the consultation last month, David Geale, the authority’s executive director for payments and digital finance, emphasized the forthcoming regulatory environment.
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules,” he stated.
With additional reporting from Joe Tidy
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