Tax authorities are closing in on crypto tax evasion, and the net is widening beyond national borders. Beginning Jan. 1 in the U.K. and more than 40 other countries, exchanges must start collecting and reporting detailed trading records for local customers. This data can expose undeclared gains and, in some cases, help investigators trace suspicious flows. The change matters for the payments and FinTech ecosystem that connects bank accounts and cards to crypto platforms.
In a Jan. 1 report, the Financial Times said major cryptocurrency exchanges will be required to collect full transaction records for U.K. customers, including purchase price, sale price and profits, and to gather and report users’ tax residency information to HM Revenue & Customs (HMRC). The U.K. is part of an initial group of 48 jurisdictions implementing the OECD’s Cryptoasset Reporting Framework, or CARF, which sets a common format for reporting and sharing crypto trading data.
“This is the beginning of the end for crypto investors who thought they could invest and gain from crypto in secrecy,” said Andrew Park, a tax investigations partner at Price Bailey.
The FT said that from 2027 HMRC will begin automatically sharing the information it receives with other participating tax authorities, including all EU countries, as well as jurisdictions such as the Channel Islands, Brazil, the Cayman Islands and South Africa. Overall, 75 countries have committed to implement CARF, with major crypto hubs including the UAE, Hong Kong, Singapore and Switzerland slated to join in 2027 and start exchanging data in 2028; the U.S. is expected to implement in 2028, with exchanges beginning in 2029.
For U.K. taxpayers, the FT noted that crypto taxes generally fall under capital gains rules, with profits above a £3,000 annual allowance taxable, although heavy buying and selling can be treated as trading and taxed as income with national insurance. HMRC has also opened a voluntary disclosure facility for undeclared gains made before April 2024 and trebled “nudge” letters to 65,000 suspected non-compliers in the 2024–25 tax year.
PYMNTS’ recent reporting has tracked the fraud backdrop that regulators cite when they push for more transparency. PYMNTS covered the Justice Department’s new crypto scam “strike force,” aimed at organized networks tied to China. PYMNTS also reported on a Senate bill that would create a federal task force to combat cryptocurrency scams, and on an SEC case alleging a $14 million scheme that targeted retail investors. In separate coverage, PYMNTS noted that bitcoin ATMs and kiosks are increasingly used to route scam victims’ cash into digital wallets, making losses difficult to recover once funds are sent.
