Britain will require domestic crypto exchanges to report transactions by locals from next year as it fills a gap in reporting rules.
The change will give the tax authority, His Majesty’s Revenue and Customs (HMRC), access to domestic and cross-border crypto transaction data for the first time.
CARF will be rolled out in 2027
The change will expand the scope of the Cryptoasset Reporting Framework (CARF), a cross-border reporting framework developed by the Organization for Economic Co-operation and Development (OECD).
The framework enables information sharing between tax authorities around the world and requires crypto asset service providers to conduct due diligence, verify users’ identities and report detailed transaction information annually.
CARF’s first global information exchange is expected to take place in 2027.
VK wants to prevent cryptocurrencies from escaping the common reporting standard
As CARF is a cross-border framework, crypto transactions made directly within the UK would be excluded from automatic reporting channels under a policy. paper shared by HMRC earlier this week.
Description of HMRC’s new measure (Source: UK Government)
The goal behind expanding the scope of CARF to domestic users is to prevent crypto from becoming an “off-CRS” asset class that escapes the visibility applied to traditional financial accounts under the Common Reporting Standard.
British officials have also said that by expanding the scope of CARF to include domestic operations, tax authorities will gain access to a more complete data set to identify non-compliance and better assess taxpayer obligations.
Britain proposes a ‘no gain, no loss’ tax rule for DeFi
The reporting change and expansion of the scope of CARF in the UK comes shortly after HMRC signaled support for a “no gain, no loss” (NGNL) approach to crypto lending and liquidity pool arrangements earlier this week.
Currently, when a decentralized finance (DeFi) user deposits funds into a protocol, even if it is to monetize those funds or take out a loan against them, this step can be treated as a disinvestment and lead to capital gains taxes. NGNL’s move could defer capital gains tax until there is real economic divestment.
HMRC has published its consultation outcome in Great Britain regarding the taxation of DeFi activities relating to lending and staking.
A particularly interesting finding is that when users deposit assets into Aave, the deposit itself is not treated as a sale for capital gains…
— Stani.eth (@StaniKulechov) November 27, 2025
In practical terms, the NGNL proposal could mean that users who deposit crypto into lending protocols, or who contribute assets to automated market makers, would no longer be taxed at the time of deposit. Instead, the tax would only be applied when they eventually sell or trade their assets in a way that produces a gain or loss.
The proposal aims to align tax rules with the way DeFi actually works. It would also help reduce administrative burdens and tax outcomes that do not reflect the economic reality of certain activities taking place in the DeFi space.
The NGNL approach would also apply to multi-token arrangements used in decentralized protocols, which are often complex. For example, if a user gets back more tokens than they deposited, the winnings will be taxed. However, the transaction is considered a loss if the user receives fewer tokens than he deposited.
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