Crypto Tax Apocalypse Unleashed: UK and Dozens Others To Enforce Strict Reporting Rules

Core Insights - The U.K. and 47 other countries are implementing the Cryptoasset Reporting Framework (CARF), marking a significant shift in global crypto taxation starting in 2026 [1][4][6] - The CARF aims to bring crypto transactions under the same tax scrutiny as traditional financial assets, addressing the issue of unreported profits from cryptocurrencies [3][5] Group 1: CARF Overview - CARF was developed by the OECD to tackle the growing issue of unreported cryptocurrency profits [3] - Under CARF, crypto exchanges and service providers must collect detailed user information, including tax residency, and report annual transaction data to local tax authorities [3][6] - The framework will facilitate international data sharing among participating countries [3][4] Group 2: Implementation Timeline - The U.K. is among the first adopters, with exchanges required to gather necessary data starting in 2026 and cross-border information sharing beginning in 2027 [4] - A total of 75 countries have committed to implementing CARF, with 48 jurisdictions already moving forward [4] - The U.S. is expected to adopt the framework in 2028, with data exchanges commencing in 2029 [5] Group 3: Implications for Crypto Users - Individuals in participating jurisdictions, particularly high-net-worth traders, will face increased scrutiny regarding their crypto transactions [5][6] - The enforcement of mandatory KYC and data sharing may deter privacy-focused users, leading some to consider decentralized finance (DeFi) or self-custody wallets [7] - Unreported gains could result in audits, back taxes, interest, and penalties, with the U.K. capital gains tax on crypto potentially reaching up to 20% [7]