Regulatory Changes: UK Expands Crypto Reporting Rules to Domestic Transactions

The United Kingdom is set to expand its cryptocurrency reporting rules to include domestic transactions. Starting in 2026, domestic crypto platforms will be required to report all transactions involving UK-resident users, according to Cointelegraph.

This move broadens the scope of the Cryptoasset Reporting Framework, or CARF, which was primarily focused on cross-border activities. The UK's tax authority, His Majesty's Revenue and Customs, will gain automatic access to both domestic and cross-border crypto data for the first time.

This expansion aims to tighten tax compliance ahead of CARF's first global information exchange scheduled for 2027. The framework, designed by the Organisation for Economic Co-operation and Development, mandates crypto asset service providers to perform due diligence, verify user identities, and report detailed transaction information annually.

Previously, crypto transactions occurring entirely within the UK were not included in automatic reporting channels, allowing for potential tax evasion. The UK's government believes that this unified approach will streamline reporting for crypto companies and provide tax authorities with a more comprehensive data set to identify noncompliance and enforce taxpayer obligations.

Alongside these changes, the UK also proposed a no gain, no loss tax structure which would defer capital gains liabilities for decentralized finance users until they sell the underlying tokens. This proposal has been generally welcomed by the local industry, as it indicates a more accommodating tax framework for DeFi activities.

These regulatory changes reflect a broader global trend, as various countries are increasingly updating their tax regulations to include digital assets. For instance, South Korea's National Tax Service recently announced it would seize cryptocurrencies held in cold wallets to prevent tax evasion.

Similarly, Spain has proposed raising the top tax rate on crypto gains to 47%. In Switzerland, the rollout of CARF rules has been delayed, although they will still be enacted in Swiss law on January 1st, with transitional measures to ease compliance for domestic firms.

Meanwhile, in the United States, Representative Warren Davidson has introduced a bill that would allow Americans to pay federal taxes in Bitcoin, exempting these transactions from capital gains taxes. The landscape of cryptocurrency regulation is rapidly evolving, with countries around the world, including the UK, taking significant steps to ensure that digital assets are integrated into existing tax frameworks.

As these regulations continue to develop, businesses and investors operating in the UK crypto market will need to adapt to comply with the new reporting requirements.