UK Begins Consultation Into OECD Crypto Reporting Standards

Key Takeaways

• The UK government is seeking to implement more cryptocurrency regulations.
• Its latest budget report anticipates this to raise around £200 million between 2026 and 2029.
• The UK is presently aspiring to be a crypto hub through numerous regulatory policies and digital asset initiatives.

The United Kingdom has launched a consultation  into its plans to implement the crypto reporting framework as outlined by the Organization for Economic Cooperation and Development (OECD).

The development, which closely follows the UK’s spring budget  announcement, comes as part of a broader effort by the UK government to close tax loopholes and tax evasion, as well as tackle the illicit and illegal use of cryptocurrencies.

Robust Crypto Oversight

The UK government seeks to implement OECD standards as it ramps up efforts to establish the nation as a crypto hub for individuals and businesses.

As per HM Revenue & Customs (HMRC), the OECD Automatic Exchange of Information (AEOI) agreements already provide a crucial  means for the UK to combat offshore tax evasion.

The Cryptoasset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS2) are the latest standards introduced to handle tax non-compliance and offshore accounts.

As detailed in the Spring Budget 2024 , the UK Treasury projects this framework to draw millions in revenues, with approximately £35 million following its first year of implementation in 2026, another £95 million between 2027-28, and a further £75 million in the 2028-29 period.

Financial Secretary to the Treasury, Nigel Huddleston MP, writes:

“The rules will come into force in 2026 at the earliest for exchanges in 2027, and the government will ensure that businesses are given certainty on the scope of the UK’s implementation in sufficient time to prepare.”

The consultation ends on May 29, 2024. Following this, the government intends to release a comprehensive report based on the feedback received and will continue engaging relevant in discussions with respondents and stakeholders with regard to the drafted regulations.

UK Crypto Hub Ambitions

Not quite. But as one of the financial cores of the global economy, the nation is well situated to become one should these new rules, regulations, and initiatives prove fruitful.

Plans include regulating stablecoins as well as the establishment of a platform for their use within the UK as a legitimate form of payment. This also involves the launch of a financial market infrastructure  ‘sandbox’ to test trading traditional assets across a blockchain.

However, the reality on the ground in the UK is a stark contrast to these ambitions. Following the introduction of strict rules around crypto advertising, Binance suspended new user signups for UK users.

Furthermore, a large number of UK banks block users from interacting with crypto or have introduced limits on how much they can deposit onto crypto exchanges/crypto-related products.

New Powers

With the recent announcement of the UK’s new capacity to freeze, seize, and destroy crypto assets without a criminal conviction, crypto observers in the UK may see this aim to ‘protect’ as severe government overreach.

From April 26, 2024, UK authorities will be able to confiscate crypto assets connected to illicit or illegal activities, which includes being able to take them directly from an exchange or custodial wallet.

Crypto-related scams are costing UK citizens billions, and this certainly means that robust consumer protections are put in place, but these latest measures don’t appear to resolve any root causes of these issues, and instead aim to deter bad actors.

Whether or not any of these new measures or regulations will attract crypto businesses, protect citizens, or indeed close tax loopholes in the UK remains yet to be seen. But with a general election set to take place this year, the reigning government is eager to get them implemented as soon as possible.