The UK’s tax authorities are intensifying their efforts to monitor cryptocurrency transactions, significantly increasing the number of warning letters sent to investors suspected of underreporting or evading taxes on their digital asset holdings. This crackdown comes as the UK sees a rise in crypto ownership amidst growing market activity, prompting regulators to tighten compliance measures.
- HM Revenue & Customs (HMRC) doubled the issuance of warning letters to nearly 65,000 in the 2024–25 tax year.
- The increase underscores the UK’s intensified focus on crypto tax compliance amid rising market participation.
- Over the past four years, HMRC has dispatched more than 100,000 such letters; activity surged with crypto adoption and price increases.
- Major crypto exchanges now provide direct transaction data, with plans for automatic global data sharing by 2026.
- US and South Korean authorities are also considering tax policy updates and enforcement against crypto tax evasion.
The UK tax authority, HM Revenue & Customs (HMRC), has intensified enforcement efforts against cryptocurrency investors suspected of tax evasion, sending nearly 65,000 warning letters in the 2024–25 tax year — more than twice the previous year’s total. These “nudge letters” aim to encourage voluntary correction of tax filings before formal legal action is taken. Such measures reflect a broader crackdown on crypto tax compliance as market interest and asset prices continue to grow.
Surging crypto adoption in the UK is evidenced by recent research estimating that approximately seven million adults now hold digital assets — a notable increase from around 4.4% in 2021. According to Neela Chauhan, a partner at UHY Hacker Young, many traders remain unaware that moving assets from one coin to another can trigger capital gains tax obligations. This growing market awareness has prompted HMRC’s enhanced efforts, as the agency now receives transaction data directly from major exchanges and will gain automatic access to global crypto trading data from 2026 through the OECD’s Crypto-Assets Reporting Framework (CARF).
US Lawmakers Consider Crypto Tax Exemptions
Meanwhile, in the United States, lawmakers are debating potential updates to crypto tax policies, including proposals to exempt small transactions from capital gains tax and clarify the tax treatment of staking rewards. During recent Senate hearings, officials discussed whether routine crypto payments should be taxed and how to fairly categorize income from staking activities. Coinbase’s vice president of tax, Lawrence Zlatkin, supported a de minimis exemption for transactions under $300 to ease compliance burdens.
North of the border, South Korea’s National Tax Service has stepped up enforcement, warning that assets stored even in cold wallets could be seized if linked to unpaid taxes — signaling a strict crackdown on crypto tax evasion that extends beyond traditional exchanges. These developments highlight increasing regulatory scrutiny across major markets as authorities seek to ensure compliance amidst volatile and rapidly evolving crypto markets.
