Cryptocurrency investors across Britain now face mandatory disclosure requirements following the introduction of sweeping new regulations on January 1.
The Cryptoasset Reporting Framework compels those trading digital currencies through UK exchanges to hand over their account information to HM Revenue and Customs (HMRC) or risk financial penalties.
Tax authorities anticipate the measures will generate approximately £300million over the coming five years.
HMRC believes thousands of crypto holders have outstanding tax obligations, with the new framework designed to capture previously unreported gains from digital asset trading.
The regulations mark a significant shift in how the government approaches the cryptocurrency sector, treating it firmly as taxable financial activity rather than an unregulated frontier.
Under the new framework, cryptocurrency exchanges operating in Britain must automatically collect and transmit detailed user data to tax authorities.
This includes customer identities, complete transaction histories, and any profits realised from buying and selling digital assets.
The information enables HMRC to properly calculate capital gains tax liabilities arising from crypto trading.
Dawn Register, a tax dispute resolution partner at accountancy firm BDO, said the crackdown has been anticipated for some time.
"HMRC has been concerned for some time about high levels of non-compliance among crypto investors," she explained.
HMRC has been concerned for some time about high levels of non-compliance among crypto investors
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According to Register, the enhanced reporting requirements will make concealing substantial crypto profits considerably more difficult.
The timing reflects the volatile nature of the market, with Bitcoin surging to nearly $124,500 during 2025 before retreating below $90,000 by year's end.
Exchanges that fail to maintain accurate records and share them with authorities face potential fines under the new regime.
For individual investors, those who profited from crypto trades during the 2024-25 tax year must submit their returns by 31 January, utilising a newly created cryptocurrency section within the self-assessment system.
Register noted that HMRC is also encouraging those with historic liabilities to come forward proactively.
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Register noted that HMRC is also encouraging those with historic liabilities to come forward proactively
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"HMRC is running a disclosure facility where taxpayers can come clean on undeclared gains and unpaid tax prior to April 2024," she said.
This voluntary disclosure route offers an opportunity for investors to rectify their affairs before the tax authority begins cross-referencing the wealth of new data it will receive from exchanges.
Britain is not acting in isolation, with similar reporting frameworks being adopted across the globe.
The European Union has approved comparable crypto tax regulations applicable to all member states, whilst the United States already mandates that platforms report transactions to the Internal Revenue Service.
Australia have committed to aligning with CARF
| REUTERSAustralia, Canada and Japan have likewise committed to aligning with CARF, facilitating international data sharing between tax authorities.
Beyond tax collection, the Financial Conduct Authority (FCA) continues consulting on broader crypto regulations until February 12, covering exchange standards, responsible broker requirements and lending restrictions.
David Geale, the FCA's executive director for payments and digital finance, emphasised that oversight is inevitable.
"Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules," he said.
HMRC have been contacted for comment.