The United Kingdom (UK) recently announced that it will be taking an emphatic step towards tightening oversight of digital assets. As published by the government on May 14, all crypto asset service providers operating in the country must begin reporting customer data and transactions from 2026. The move comes as part of the country’s effort to align crypto regulations with traditional tax laws. 

By implementing the Organisation for Economic Co-operation and Development’s (OECD) Cryptoasset Reporting Framework (CARF), the UK aims to curb tax evasion by digital assets users. Following the announcement, Mark Aruliah – the Head of EMEA Policy and Regulatory Affairs at Elliptic, believes that it’s crucial for firms to ensure they have the right tools to comply with the reporting requirements. Those that fail to do so risk lagging behind in the shifting financial market. 

UK’s Cryptoasset Reporting Framework

Starting January 1, 2026, the UK will require all crypto firms operating in the country to comply with the OECD Cryptoasset Reporting Framework. This framework will require the crypto firms to collect specified user data and report all transactions by crypto asset holders. This legislation will help improve tax transparency by crypto asset services providers in the UK and put a barrier to cross-border tax evasions by digital asset holders.

“From 1 January 2026 if you provide crypto asset services in the UK, you’ll need to start collecting certain user and transaction data. This is because the UK is introducing the Organisation for Economic Development (OECD) Cryptoasset Reporting Framework (CARF),” an official publication stated.

Crypto asset services providers in the UK will be required to collect and report all individual users, all entity users – which for CARF includes companies, partnerships, trusts and charities, and crypto asset transactions for users in the UK and other CARF countries. On an individual basis, crypto firms must provide the all bio data as specified. 

These firms must also report specified data from partnerships, trusts and charities. Additionally, they must report the value, type of crypto asset, type of transaction and the number of units for every crypto transaction. 

The UK Revenue and Customs department advises firms to start the collection of the specified data early. Failure to collect and report the data will attract a penalty of up to £300 (approximately $402 as at current exchange rates) per user for inaccurate, incomplete, or unverified reports. 

CARF Implementation is a Turning Point for UK’s Crypto Regulation

According to Mark Aruliah – the upcoming implementation of the Cryptoasset Reporting Framework marks a pivotal moment for digital asset regulation in the UK. He believes that the step is crucial to ensure transparent tax reporting in the country, especially for digital asset service providers and users. 

“The UK Government’s adoption of the OECD’s Cryptoasset Reporting Framework (CARF) marks an important step in aligning crypto asset regulation with global tax transparency efforts. It reinforces the UK’s commitment to building a credible, well-regulated environment for digital assets,” Aruliah shared. 

He further acknowledged that while the implementation of this change could result in some challenges for the ecosystem, the broader benefits outweigh these challenges. Aruliah believes that transparency in the crypto sector is crucial to build confidence among investors. 

“Transparency is a core feature of crypto and key to building investor confidence. With financial institutions in the UK already subject to robust compliance and reporting requirements, CARF brings digital asset firms into closer alignment with these expectations,” he stated. 

With cryptocurrencies gaining mainstream adoption, there lies a risk for misuse. Governments and regulatory bodies are thus under pressure to mitigate the risks. By implementing the CARF starting 2026, the UK government will not only ensure crucial tax compliance but also clear the ground for the integration of crypto in UK’s financial ecosystem. 

Industry Challenges and Opportunities 

The implementation of the CARF in the UK will not come without challenges. As per Aruliah, the broader financial industry has been struggling with the reporting of personal transaction data. This has posed the risk for heightened financial crimes. But, with CARF’s implementation, authorities could track and prevent crypto-related financial crimes. 

The UK’s Cryptoasset Reporting Framework will also open the doors for new opportunities especially in the reporting services sector. Aruliah believes that “clarity on legal obligations to reporting will help and also the growth of new reporting services.” 

While most firms are taking a proactive approach in ensuring compliance, those that don’t will risk being left behind. With the 2026 deadline drawing closer, the long-term payoff lies in establishing a transparent, secure, and globally integrated digital asset market.