by Vincent Muthee
The UK government has set a firm date for its next major step in crypto oversight as new reporting rules are set to take effect on January 1, 2026. The move will force all registered exchanges and service providers to collect complete transaction data from UK users for reporting to His Majesty’s Revenue and Customs (HMRC).
This move grants the UK tax agency direct access to both domestic and foreign crypto data for the first time. It also aligns with the union’s Cryptoasset Reporting Framework (CARF) amid rising concerns over unreported crypto gains and opaque trading flows.
UK Widens CARF To Cover Local Activity
Under the new framework, the UK will apply CARF rules more aggressively than initially expected as policymakers expand the framework to include domestic transactions. The new advancement comes after warning that crypto should not become an off-CRS asset class. UK’s Cryptoasset Reporting Framework original design focused on cross-border reporting, but officials argue that local trades also needed visibility.
HMRC expects exchanges to verify user identities and run full background checks before submitting annual reports. The department wants transaction-level details covering buys, sells, transfers, and token movements. Officials further confirmed that trades conducted only within the UK will not enter the global exchange cycle but will still sit inside the national reporting structure.
This combined approach gives regulators a larger dataset for detecting inconsistencies in annual tax filings. The update also aims to reduce duplicative reporting for service providers already preparing for global exchange obligations.
Government Introduces “No Gain, No Loss” Rule For DeFi Users
The UK Treasury also released its “no gain, no loss” mechanism as part of the same policy package. This rule delays capital-gains liabilities for DeFi users until they dispose of their tokens. It addresses a long-running dispute over how to tax temporary transfers common in lending, staking, and liquidity-pool activity.
Officials confirmed that industry players supported the change during the consultation period. Many argued that earlier rules forced users to calculate gains during routine contract interactions.
“Following the consultation, HMRC has continued to have constructive, informal engagement with advisers and industry on how the design could be improved. As a result, HMRC has been working to develop a potential approach where certain disposals are treated as ‘no gain, no loss’ (NGNL), and which could be extended to include automated market makers,” the official announcement read.
Stakeholders also warned that inaccurate pricing data and limited tooling made compliance difficult for casual users. The new approach thus attempts to align taxation with economic outcomes rather than technical processes. It places the tax point at final disposal rather than intermediate transfers that do not produce realized gains.
Industry Pushback Grows Over FCA Restrictions
UK’s new clampdown arrives as industry figures criticize the FCA’s ongoing promotions regime. Aave founder Stani Kulechov, for instance, said the rules create unnecessary friction for stablecoin users. He pointed to long questionnaires and mandatory cooldown periods that treat stablecoins like high-volatility assets.
Kulechov argued that the framework blocks simple on- and off-ramp activity. His comments echoed broad frustration over the FCA’s interpretation of risk. Developers say the rules raise compliance costs for services that already follow strict transparency standards.
Adding to Kulechov’s argument, Alexis Onchain stated that past engagements with the FCA produced limited progress. He said consultations often ended with decisions that reduced user experience and added more reporting steps for already compliant firms.
Spent years dealing with the FCA at Ramp. Talking to them is like talking to a brick wall. They invite you to “consultations” then ignore every piece of feedback. One bad ruling after another, each one degrading UX and raising the odds that UK users get scammed.
The whole point…
— AIexis.eth (@alexisonchain) November 28, 2025
The renewed criticism highlights industry concern that the UK’s broader reporting expansion may intensify the regulatory burden in the coming years.
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