Why crypto tax reporting now hinges on knowing your customer

Crypto platforms are discovering that tax transparency starts long before a report ever reaches a regulator’s desk.

The OECD’s Crypto-Asset Reporting Framework (CARF) was designed to bring greater tax transparency to cryptoassets by requiring relevant service providers to collect and report tax-related information about their users and transactions. The UK adopted CARF from 1 January 2026, with the first international exchanges of information due in 2027.

For crypto exchanges and other affected providers, identity verification specialist Identomat notes that this creates a challenge that extends well beyond producing an annual report.

Under the UK regime, Reporting Cryptoasset Service Providers must carry out due diligence and report relevant transactional information to HMRC each year. That means platforms need systems capable of linking transactions to identifiable, reportable customers, using data such as name, address, date of birth, tax residence and tax identification number. According to Identomat, the compliance obligation therefore begins with customer data collection and verification, not with the report itself.

This is proving harder than it sounds for platforms with large, established user bases. Accounts may have been opened at different points in the industry’s development, under varying onboarding standards. Some customers gave limited information at signup; others have since relocated, changed tax residence, or simply left records outdated.