The UK will require crypto firms to report all user and transaction data to HMRC by January 2026.
Non-compliance may result in a £300 fine per user for incomplete or inaccurate reporting by crypto platforms.

The UK government seems to be no longer playing cat and mouse with the crypto industry. Starting January 1, 2026, all digital asset service providers—both UK-based and those serving UK residents abroad—will be required to collect and report their user and transaction data to HM Revenue & Customs (HMRC). This rule is not just a suggestion. Failure to comply could result in a fine of £300 per user.

So, imagine you have a non-custodial crypto wallet platform that upholds anonymity. Starting in 2026, you will need to know who your users are, where they live, and even their tax identification numbers. All transactions will also have to be recorded in detail—how much, what type of assets, where they are going. This data must be sent to HMRC every year, starting May 31, 2027.

On the other hand, this policy is part of the OECD’s Crypto-Asset Reporting Framework (CARF). The goal? Yes, of course, increasing tax transparency and closing loopholes for avoidance through digital assets. Not only local players are affected, foreign players must also comply if they serve British citizens.

Not Just Regulation, the UK is Also Building Crypto Infrastructure

But the crypto story in the UK is not just about strict regulations. There are also efforts to build an ecosystem that is “legal but innovation-friendly.” For example, on May 13, 2025, GFO-X was officially launched in London. This is the first regulated and centrally settled digital asset derivatives platform. Supported by M&G and approved by the FCA, GFO-X has attracted big players such as Standard Chartered, IMC, and Virtu Financial.

They even use clearing services from LCH—a subsidiary of the London Stock Exchange Group. This could be a signal that the UK does not just want to regulate, but also become the main stage for financial innovation.

Furthermore, on May 14, 2025, FalconX announced a strategic partnership with Standard Chartered to serve institutional crypto investors. This partnership began in Singapore and is planned to expand to the Middle East and the US. Imagine, big traditional banks are now starting to partner with crypto brokers to target the institutional market. The world is indeed changing rapidly.

However, stricter regulations also leave a question mark: will all players comply, or will they choose to leave the UK due to heavy compliance costs? Moreover, previously CNF reported that the FCA also planned to prohibit the use of borrowed funds to buy crypto by retail investors. The reason is because of the increasingly worrying debt risk.

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Filed under: Bitcoin - @ May 18, 2025 8:00 am