UK Crypto Platforms Face Stricter Reporting Rules

Stricter reporting requirements are on the horizon for cryptocurrency platforms operating within the United Kingdom. The government is implementing new mandates that will compel digital asset service providers to meticulously track and report extensive details concerning user transactions and activities.

Mandatory Reporting Details

Under the upcoming regulations, entities handling digital assets, including exchanges, custodians, and brokers, will be obligated to record every single trade and transfer executed by their users. This requirement extends beyond just transaction specifics, demanding the collection of comprehensive personal identification data, such as full names, residential addresses, and tax identification numbers for each user involved. Furthermore, details about the transactions themselves, including the specific types of assets traded and their volumes, must be logged. The rules will apply broadly, encompassing reporting obligations not only for individual users but also for institutions like charities, businesses, and trusts engaged in digital asset activities.

Compliance and Enforcement

Failure to comply with these stringent reporting standards could result in significant penalties. HM Revenue & Customs (HMRC) has indicated that non-compliant platforms could face fines of up to £300 for each user record that is not properly maintained or reported. HMRC has urged crypto companies to proactively begin preparing their systems now to ensure readiness. The agency plans to issue specific implementation guidance well in advance of the rules taking effect.

Adoption of International Standards

These significant regulatory adjustments are part of the UK’s commitment to adopting the OECD Crypto-Asset Reporting Framework (CARF). This globally recognized standard is designed to enhance transparency across the digital finance landscape and combat tax evasion facilitated by the use of cryptocurrencies and other digital assets.

Broader Regulatory Landscape

The move aligns with the government’s broader ambitions for integrating the digital asset sector into the established financial regulatory framework. Chancellor of the Exchequer, Rachel Reeves, recently reiterated the UK’s stance, stating that the nation welcomes innovation in the crypto space but insists on accountability. A legislative bill introduced earlier this year also aims to bolster efforts against fraud and cultivate a more stable environment conducive to responsible innovation within the sector.

Market Context and EU Comparison

The heightened regulatory focus comes as interest and adoption of cryptocurrencies continue to grow across the UK. Data from the Financial Conduct Authority (FCA) shows that the proportion of adults owning cryptocurrencies rose significantly to 12% in 2024, a threefold increase compared to just 4% in 2021. While the UK is enhancing its oversight, its approach presents notable differences when compared to the European Union’s MiCA regime. Notably, the UK does not plan to impose volume limits on stablecoins and intends to allow foreign stablecoin issuers to operate domestically without mandatory registration, reflecting a potentially more open model aimed at attracting international fintech firms.