For many crypto users, buying and selling digital coins has often felt private, almost separate from the traditional financial system. That sense of distance is now fading. In the UK, new rules that took effect on January 1 mean people who use cryptocurrency exchanges must share their account details with tax authorities or risk penalties. The change signals a clear shift in how governments see crypto: not as a niche experiment, but as taxable financial activity that needs closer oversight.
Oluwajeminipe Fasheun-Motesho
The move is led by HM Revenue and Customs, which says it wants to close a growing tax gap linked to crypto trading. For years, authorities have struggled to track profits made from digital assets, especially when trades happen across borders or through platforms that do not report user activity. Under the new system, crypto exchanges operating in the UK are required to automatically collect and share accurate user information with HMRC.
How the new reporting rules work
At the centre of the change is the Crypto-Asset Reporting Framework, known as CARF. This framework requires exchanges to report details such as user identities, transaction history, and gains made from buying and selling crypto. HMRC says this information will help it correctly assess capital gains tax and other taxes owed on crypto profits.
Dawn Register, a tax dispute resolution partner at BDO, says the shift has been a long time coming. “HMRC has been concerned for some time about high levels of non-compliance among crypto investors,” she said. According to her, the new rules make it much harder for people with large crypto gains to keep those profits hidden.
The timing also reflects how much the market has grown. Bitcoin alone rose sharply earlier in 2025 before falling again later in the year. Anyone who bought low and sold high during that period may now face a tax bill, and HMRC believes thousands of people have not paid what they owe.
What happens if users do nothing
Under the new rules, exchanges must keep user records up to date and pass them on to tax authorities. If they fail to do so, they can be fined. Users who made gains during the 2024 to 2025 tax year will also need to file a tax return by January 31, using a new crypto section added to the self-assessment system.
Register says HMRC is also pushing people to come forward voluntarily. “HMRC is running a disclosure facility where taxpayers can come clean on undeclared gains and unpaid tax prior to April 2024,” she explained.
This is not just a UK issue
The UK is not acting alone. Similar rules are being rolled out in many other countries, making it harder for crypto users to move money across borders to avoid tax. The European Union has approved new crypto tax reporting rules that will apply across all member states, forcing exchanges to share user data with national tax offices. The United States already requires crypto platforms to report user transactions to the Internal Revenue Service, and reporting requirements are expected to tighten further.
Countries like Australia, Canada, and Japan have also announced plans to align with CARF, allowing tax authorities to share crypto data internationally.
Tighter rules are still coming
Tax reporting is only one part of a broader regulatory push. In the UK, the Financial Conduct Authority is still consulting on new rules for crypto platforms, including standards for exchanges, limits on risky lending, and stronger protections for users.
David Geale, the FCA’s executive director for payments and digital finance, made it clear that regulation is unavoidable. “Our goal is to have a regime that protects consumers, supports innovation and promotes trust,” he said, adding that feedback would help shape the final rules.
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