The UK government is preparing to enhance compliance requirements for cryptocurrency companies by strengthening regulatory oversight of the industry. In newly released guidelines aimed at improving tax compliance, UK crypto firms are instructed to gather user information, including transaction data, in accordance with the Crypto-Asset Reporting Framework (CARF). The Paris-based Organisation for Economic Co-operation and Development (OECD) announced the CARF legislation in October 2023, and the UK intends to implement these regulations prior to its plans to establish comprehensive rules for the crypto sector by 2026.
Crypto Firms Required to Gather User Information Including Transaction Data
The latest guidance from the UK government mandates that cryptocurrency firms collect the names, dates of birth, and residential addresses of their retail users. Additionally, other details such as the country of residence, National Insurance number, and Unique Taxpayer Reference must also be obtained from individuals purchasing and holding cryptocurrencies.
For business users, crypto firms are required to uphold legal business names, primary business addresses, and company registration numbers, in accordance with the announcement.
“Depending on the information you gather, it may be necessary to submit an annual report to His Majesty’s Revenue and Customs (HMRC),” the announcement stated.
In terms of transaction details, crypto firms must keep records of data that include the value of funds and the type of cryptocurrency utilized, as stipulated by the guidelines.
The US Department of Justice is reported to have initiated an investigation into the Coinbase data breach.
“It is essential to ensure that the information you collect is accurate by conducting due diligence. We will provide updates to the guidance regarding how to accomplish this in due course,” the announcement further noted.
UK officials have indicated that crypto companies found to be in breach of these regulations may face penalties of up to GBP 300 (approximately Rs. 35,000) for each user.
Firms are required to align their operations with the CARF laws by January 1, 20
The UK is actively engaged in the evolving global landscape of crypto regulation. The Financial Conduct Authority (FCA) of the UK aims to finalize national crypto legislation by 2026.
In the interim, the Prudential Regulation Authority of the Bank of England (BoE) has directed UK-based corporations to disclose their exposure to crypto assets.
The BoE has also collaborated with the New York Department of Financial Services (DFS) to exchange senior officials with expertise in managing sectors such as digital assets and emerging payment systems.
In recent months, Coinbase, based in the US, and Austria’s BitPanda have obtained FCA approvals in the UK to legalize their operations.