UK Crypto Crackdown: Firms Must Hand Over User Data by 2026—Or Face Brutal Fines

Britain’s financial watchdogs just dropped a bombshell: Starting next year, crypto companies operating in the UK must collect and report detailed user transaction data. Fail to comply? Prepare for penalties that’ll make your portfolio’s worst day look like a dip.

The move—framed as an anti-money laundering measure—effectively turns exchanges into tax informants. Because nothing says ’decentralized revolution’ like government-mandated surveillance, right?

Bonus jab: At least the fines are predictable—unlike crypto markets.

Hefty Penalty for Non-Compliance

Failure to comply with the new rules introduced by the UK government, or failure to submit inaccurate or incomplete data, will expose firms to significant penalties. HMRC has set fines at up to £300 per user for misreporting, a figure that could quickly escalate for platforms with large user bases.

According to the government, the UK intends to enhance tax compliance and crack down on illicit activity. The government also intends to align crypto oversight with traditional banking standards. For this, the companies will have to report the value of the transaction, type of cryptoasset, eg Bitcoin, Ethereum, and more. 

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UK Decides to Align with US Rather than EU Over Crypto Regulation

Amidst fear of losing ground to global fintech hubs, the UK has announced new draft regulations for the crypto sector.

On 29 April 2025, Finance Minister Rachel Reeves said, “Through our Plan for Change, we are making Britain the best place in the world to innovate – and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.”

The government is now introducing compulsory regulation for crypto exchanges, dealers, and agents.

Importantly, the UK has decided to align with the US, treating crypto assets as securities. This marks a departure from the EU’s Markets in Crypto-Assets (MiCA) framework, which took effect in December 2024.

“The Chancellor also revealed that the UK and US will use the upcoming UK – US Financial Regulatory Working Group to continue engagement to support the use and responsible growth of digital assets,” the UK government website said. 

The government aims to finalize the legislation by the end of 2025.

Key Takeaways

• According to the government, the UK intends to enhance tax compliance and crack down on illicit activity. 

•   HMRC has set fines at up to £300 per user for misreporting, a figure that could quickly escalate for platforms with large user bases.