UK tax agency seeks direct crypto data

TLDR

HM Revenue & Customs (HMRC) is seeking expanded powers to obtain crypto data directly from service providers, raising new questions about privacy and tax enforcement for UK crypto users.

1. HMRC has consulted on powers to demand customer records from a broad range of crypto businesses, but the proposals have not yet been finalized or approved.
2. The main concern is linking taxpayers identities to on-chain wallet addresses, which could expose long term transaction histories and increase personal security risks.
3. The move sits inside a wider global push for automatic crypto tax reporting, with UK authorities expected to start receiving detailed crypto data under international rules from 2027.

Deep Dive

1. HMRCs Proposed Powers

Reports indicate HMRC wants to extend its information-gathering powers so it can request customer data directly from cryptoasset service providers, coupled with updated powers over software and electronic records, similar to financial institution notices used for banks and brokers. Recent coverage describes these powers as applying not just to exchanges, but potentially to wallet software, block explorers, hardware wallet makers and tax software firms, prompting warnings that the definition is very broad.

A formal consultation on the proposals closed in early September 2026, and ministers had not made a final decision as of early October. Existing UK rules that implement the OECD Crypto-Asset Reporting Framework already require certain crypto businesses to collect and report data from 2026, but this new step would determine exactly which firms HMRC can compel and what they must provide. HMRC argues the changes are intended to ensure correct tax collection with proportionate safeguards, though some oversight mechanisms, such as an annual report to Parliament on these notices, could be removed under the draft.

2. Privacy And Self-Custody Impact

The core privacy issue is the link between real world identity and pseudonymous blockchain activity. Commentary on the proposals warns that if HMRC can obtain names, addresses and tax identifiers from service providers and match them to self-custody wallet addresses, it could expose years of public transaction history on chains like Bitcoin (BTC), far beyond what is strictly needed to calculate tax.

Critics highlight risks such as data breaches, extortion and physical threats, especially for individuals who hold or have held large balances. There are also unresolved technical questions, including whether noncustodial software firms could ever be compelled to make currently unreadable or off-device data accessible. The eventual safeguards, limits on what can be requested, and how data is secured and retained will matter as much as the headline power itself.

3. Global Reporting Context

HMRCs push fits into a broader international trend. In Europe, DAC8 requires crypto service providers to collect customer and transaction data, including tax IDs and certain external wallet transfers, with 2026 data to be shared among tax authorities in 2027. UK tax statistics already show 17,600 taxpayers declared 1.38 billion of crypto gains in the 20242025 tax year, and the country expects to start receiving crypto customer information under these global arrangements from 2027.

For UK crypto users, the practical impact is likely more comprehensive matching between on-exchange records and tax returns, plus greater scrutiny of large or frequent disposals. The open question is how far direct access powers will reach into the ecosystem beyond exchanges, and whether Parliament or regulators will narrow the scope in response to privacy and security concerns.

Conclusion

HMRC is not introducing crypto tax from scratch, but seeking stronger tools to enforce rules that already exist, by widening who it can compel for data and potentially deepening identity links to on-chain activity. The eventual balance between enforcement and privacy will depend on how the proposals are redrafted after consultation, the definition of covered service providers and the safeguards placed on sensitive data. Until those details are decided, UK crypto users should assume tax reporting expectations will rise and monitor how identity-to-wallet linkage and data protection are handled in the final framework.