The UK government will mandate that cryptocurrency companies gather and report user and transaction information starting January 1, 2026. This will include each individual’s full name, residence address, and tax identification number.
Significant Penalty of £300 Per User for Incorrect Reporting
As per a recent statement by HM Revenue & Customs, this initiative will align with the Organisation for Economic Co-operation and Development (OECD) Cryptoasset Reporting Framework (CARF).
The announcement advised companies to begin collecting necessary information in advance of the new regulations, emphasizing that failure to deliver precise, comprehensive, or verified reports could result in fines up to £300 per user.
Comprehensive Data Requirements
Under the new rules, crypto companies are required to collect detailed data from all individual and entity users, as well as from transactions involving users in the UK and other CARF jurisdictions.
For individual users, this data must include the user’s full name, birth date, home address, country of residence, National Insurance number or Unique Taxpayer Reference (if a UK resident), and a tax identification number (TIN) along with the issuing country (for non-UK residents).
Entity users must provide the legal business name, primary business address, registration number (for UK firms), and TIN along with the country of issuance (for non-UK firms). In certain situations, platforms may also need to collect details about controlling persons within the company.
Transaction data must detail the value, type of cryptoassets, transaction type, and quantity involved.
The implementation of these regulations is anticipated to generate substantial data collection. A recent YouGov survey indicated that cryptocurrency ownership among Britons surged from 6% in 2022 to 14% in 2023.
Additionally, the Financial Conduct Authority (FCA) has expressed intentions to potentially limit UK residents’ capacity to purchase cryptocurrencies using credit, though approved stablecoin transactions would be exempt from such constraints. Public feedback is currently being solicited on this and other proposed regulations.
Currently, the FCA mandates all cryptocurrency businesses operating within the UK to register. Its regulatory focus is primarily on anti-money laundering policies, financial promotions, and consumer protection laws. Despite the registration requirement, the FCA denied 86% of crypto firm applications in the year ending April 2024; however, this rate has since decreased to 75% in the current financial year.
