Cryptocurrency holders warned about new rules to unmask anyone dodging tax
Those who do not comply risk a £300 fine from HMRC.
Once data is received from service providers, HMRC will identify those who have not been correctly paying tax on their crypto profits.
The move is part of a wider drive by HMRC to tackle non-compliance.
Service providers will start collecting data on users' activities from January 2026. Any service provider that fails to report this information, or submits inaccurate or incomplete reports, could also be charged a penalty of up to £300 per user by HMRC, the revenue body said.
The new rules are known as the Cryptoasset Reporting Framework.
Capital gains tax may be due when selling or exchanging crypto, while income tax and national insurance could apply to crypto received from employment, mining, staking or lending activities.
People who are unsure about their tax obligations can check if they need to pay tax when they receive or sell crypto on gov.uk. They can also tell HMRC about unpaid tax on crypto using the cryptoasset disclosure service.
James Murray, Exchequer Secretary to the Treasury, said: 'By ensuring everyone pays their fair share, the new crypto reporting rules will make sure tax dodgers have nowhere to hide, helping raise the revenue needed to fund our nurses, police and other vital public services.'
Jonathan Athow, HMRC's director general for customer strategy and tax design, said: 'Importantly, this isn't a new tax – if you make a profit when you sell, swap or transfer your crypto, tax may already be due.
'These new reporting requirements will give us the information to help people get their tax affairs right.
'I urge all cryptoasset users to check the details you will need to give your provider. Taking action now and having this information to hand will help you avoid penalties in the future.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
Trump Media seeks SEC approval for blue-chip crypto ETF
July 8 (Reuters) - Trump Media & Technology Group (DJT.O), opens new tab is looking to launch an exchange-traded fund that will invest in multiple crypto tokens, including bitcoin, ether, solana and ripple, a filing with the U.S. markets regulator showed on Tuesday.
Coin Geek
4 hours ago
- Coin Geek
Cynthia Lummis digital asset tax bill seeks capital gain reforms
Getting your Trinity Audio player ready... United States Senator Cynthia Lummis (R-WY) has introduced 'comprehensive digital asset tax legislation' that would provide, amongst other measures, exemptions on gains from digital asset transactions, an end to the so-called 'double taxation' of digital asset miners and stakers, and greater parity with how other asset types are treated. On July 3, Senator Lummis—a prominent supporter of the digital asset space and chair of the Senate digital assets subcommittee—published a bill to amend the Internal Revenue Code of 1986 to reform the treatment of digital assets, which the Wyoming Republican claimed would 'generate approximately $600 million in net revenue during the 2025-2034 budget window.' The legislation proposes several tax reforms to benefit the digital asset space, whilst bringing the asset class more in line with the treatment of other securities and commodities in certain areas . 'In order to maintain our competitive edge, we must change our tax code to embrace our digital economy, not burden digital asset users,' said Lummis. 'This groundbreaking legislation is fully paid-for, cuts through the bureaucratic red tape and establishes common-sense rules that reflect how digital technologies function in the real world.' She added that U.S. lawmakers 'cannot allow our archaic tax policies to stifle American innovation, and my legislation ensures Americans can participate in the digital economy without inadvertent tax violations.' Tax exception for small transactions First on the list of changes would be a 'de minimis exclusion' from taxation for digital asset gains or losses of $300 or less, with a $5,000 yearly total cap—unless 'the sale or exchange is for cash or cash equivalents' (including payment stablecoins), property used in active trade or business, or property held for income production. 'This provision recognizes the impracticality of tracking every small digital asset transaction, such as buying coffee with Bitcoin, which creates enormous compliance burdens for ordinary users,' said a press release from Lummis' office, published last July 3. 'The $300 threshold strikes a reasonable balance between tax compliance and practical usability of digital assets as a medium of exchange.' This proposal aims to boost the market for small digital asset transactions and payments, and would be especially beneficial to micropayment markets. Mining and staking Another significant proposal in the bill aims to end the controversial 'double taxation' of digital asset miners. Under the IRS's existing rules, a U.S. taxpayer who successfully mines digital assets must treat the 'fair market value' of the recently created assets as gross income at the moment it is 'created'—meaning, the creation of the asset triggers a taxable event. However, when the miner later sells or exchanges those assets, a second taxable event occurs on any appreciation or loss over the original value at the time of sale. In other words, digital asset miners are effectively being taxed twice on the same assets under current U.S. tax rules—first at creation and then again at disposition. Lummis seeks to end this double taxation by amending the rules to make mining and staking income not recognized until the sale or disposition of the produced assets (the second taxable event), and treat it as ordinary income when recognized. 'This aligns the taxation of mining and staking rewards with the actual realization of economic benefit, rather than forcing recognition based on volatile and often uncertain fair market values at the time of receipt,' said the press release. 'The approach prevents cash flow problems where taxpayers owe taxes on assets they haven't sold and may not be able to liquidate easily.' Aligning with other asset classes Further notable changes proposed by the bill include expanding securities lending rules to include digital assets, which prevents a result where temporarily lending digital assets would trigger immediate tax consequences and potentially discourage legitimate lending markets in digital assets—a situation that Lummis described as 'absurd.' Another reform involves closing an 'unfair loophole' where digital asset investors could engage in tax-loss harvesting strategies—whereby an investor sells an asset at a loss to offset capital gains taxes—unavailable to traditional securities investors. This can be done for gaming capital gains tax, but also as a form of 'wash trading,' in which a trader sells a security at a loss and buys a 'substantially identical' security within 30 days before or after the sale—a practice that can be used to mislead investors into believing that trading volumes for a security are higher than they really are. Senator Lummis' bill proposes adding digital assets to an IRS rule that bars taxpayers from deducting from their taxable income losses that result from wash trades of securities; an exception was included for dealers and hedging transactions. The bill would also allow dealers and traders in digital assets to elect 'mark-to-market treatment,' also known as 'fair value accounting,' whereby the balance sheet shows assets at their fair market value, which may be higher or lower than cost. 'This provides digital asset dealers and traders with the same tax treatment available to their securities and commodities counterparts, eliminating arbitrary discrimination based on asset type,' said Lummis' announcement. Lastly, the proposed legislation would exempt actively traded digital assets from 'qualified appraisal' requirements for charitable contributions, thus removing 'an unnecessary bureaucratic barrier that has discouraged charitable giving of digital assets.' Based on the current IRS rules, donations of non-cash assets—whether commodities, securities, or digital assets—valued at more than $5,000 generally require a 'qualified appraisal' to prove that the stated value of the assets is accurate. However, publicly traded securities are exempt, as their fair market value can be readily determined from the current trading price. According to Lummis' bill, digital assets should also be exempt, as they often have readily determinable fair market values through active trading. Removing this requirement, suggested the Senator's press release, would encourage philanthropy while recognizing that actively traded digital assets should be treated similarly to publicly traded securities for valuation purposes. The tax reform bill will now head into the long U.S. legislative process, beginning with debate and subsequent vote in the Senate, at an as-yet-unspecified time in the next few months. Watch: Reggie Middleton on DeFi, booms/busts & crypto regulation title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen>
Coin Geek
4 hours ago
- Coin Geek
Bitcoin tradeoffs
Homepage > News > Editorial > Bitcoin tradeoffs Getting your Trinity Audio player ready... Spend enough time in the blockchain world, and certain dogmas begin to sound like laws of physics. Everyone should be able to run their own node. Initial sync times should be quick. The more nodes, the better. Your wallet should 'just work,' pulling balances from thin air the moment you enter your seed phrase. Scratch beneath that elegant surface, though, and you'll find these assumptions are anything but universal truths. They're artifacts of a very specific set of trade-offs; decisions made years ago by a handful of developers on one branch of Bitcoin's family tree. And they've so thoroughly imprinted themselves on the industry that anything diverging from them looks like heresy. Take the most famous of these: the belief that it's more important for poor people to run nodes than for poor people to transact. The people who hijacked bitcoin sold this concept to the world: The poor must be able to validate the BTC payments of the rich, but only the rich can afford payments on the network. Also, hijackers have custodial solutions available for the poor to make 2nd class payments. BTC made that explicit bargain. Block sizes were throttled to an absurdly small 1 MB, which is roughly one low-resolution JPEG per block or seven transactions per second globally. So any hobbyist could download and validate the chain from a spare laptop. But what was sacrificed? Throughput. Utility. The very capacity of the network to handle global commerce. In BTC, transaction fees spike whenever 'congestion' hits, making simple payments costly or even infeasible. But that was the deal: cheap nodes, expensive transactions. It locked Bitcoin into a model where only the well-heeled could rely on the network day-to-day, and everyone else could use some kind of custodial system or a vaporware L2 like Lightning Network. These trade-offs, in my opinion, are profoundly regressive. And once you accept that premise (that keeping nodes dirt cheap matters more than serving billions of transactions), you start building expectations around it. Wallets that simply derive a seed phrase, query a lightweight index, and instantly show balances only work because the UTXO set is tiny. BSV deliberately challenges this. When your ledger is designed to scale without artificial ceilings, the set of unspent outputs balloons. A wallet restoring from a mnemonic alone, without additional proof structures, starts to look quaint. For small blockers, they would argue that this is irresponsible. Right but how will wallets work in the teranode ecosystem? Because from my understanding and it was @ProjectBabbage who first brought this to my attention, that it's no longer possible to restore a wallet from just a private key alone. The issue is that with massive blocks,… — Eric Chennells (@EricChennells) July 5, 2025 That's why BSV wallets increasingly incorporate Merkle proofs alongside private keys, pinpointing funds directly with cryptographic receipts. It's an elegant solution if you can clear the mental hurdle that things shouldn't always work the way BTC taught us. Luckily, there is an official Wallet Toolbox, and lots of unofficial ways to store the UTXO set with Merkle proofs, and I foresee GorillaPool (and possibly other miners) offering UTXO sync and wallet restoration as a simple, paid service on the network. You are completely correct, amd you are one of the very few people who actually have a very good understanding of this. You deserve a massive shoutout for being an informed participant in the ridiculous thing is that your post was only seen by 23 people. You MUST… — Babbage (@ProjectBabbage) July 6, 2025 Other Dogmas: Initial sync time and 'the' mempool BTC folks boast that spinning up a full node should be quick. They can promise that because they capped the block size years ago. But if your network's goal is to become the data layer for global trade, finance, Internet of Things (IoT), and public records, that promise becomes a relic quickly. On BSV, initial sync is naturally longer. That's not a flaw, thought. It's a market opportunity. I foresee companies like GorillaPool shipping a fully synced disk image at the latest block height. Need a new archival node? Pay a modest fee, spin up in hours, and join the network with minimal downtime. It's simply a commercial solution to a commercial-scale problem. Of course, cypherpunks who want to run a node on their wife's boyfriend's computer will be upset, but opportunity waits for no one! Or consider the mempool: Bitcoin's dusty, dimly lit waiting room where your transaction sits, tapping its foot and checking its watch, awaiting the next block. In BTC, this feature is designed to create opportunities for 'important transactions' to bid higher for block space. Small blocks mean your payment often lingers in the mempool for hours, maybe days, until there's room to squeeze into a block. This is framed as decentralization at work, as the network politely queues your transaction in a traffic jam and calls it secure. On BSV, this entire dynamic changes. The mempool is typically empty. Transactions flow straight through and settle as abundant block space swallows global throughput without congestion pricing. And soon, even this concept will evolve. Under Teranode, the mempool itself starts to disappear. It's replaced by an unconfirmed transaction store inside a dedicated block assembly microservice. Nodes coordinate by exchanging massive subtrees of unconfirmed transactions, optimizing for speed, parallelization, and truly industrial-scale propagation. Instead of a dusty waiting room, it's more like an express terminal: transactions get batched, sorted, and pushed toward confirmation at a velocity that makes the mempool model look medieval. Dogma, The Third: Muh node Perhaps the most overlooked distortion is the notion that more nodes always means better decentralization. It's an easy sell at cocktail parties with Larry Fink and Jack Dorsey, but it's to the detriment of network health, and it's built on a false premise. Small blockers believe miners should always be presumed malicious, so they believe they must have lots of non-mining 'nodes' with copies of the chain ready to fork away from the chain the miners run, which is a crazy premise. So when BTC 'Muh Node' crowd says they will enforce the rule set that doesn't comply with the law, they're saying they will run a chain that isn't trading anywhere institutional anymore. Miners will follow the legal chain, and NodeBros spend a year looking for the next block. — Kurt Wuckert Jr (@kurtwuckertjr) November 14, 2019 Furthermore, a blockchain's security doesn't magically improve by bloating its edge with thousands of underpowered nodes. In fact, managing propagation across countless low-bandwidth peers introduces fragility. BSV's approach (fewer, highly robust nodes operating as industrial data centers) emphasizes throughput and reliability. The trade-off? Fewer players are in the backbone, but a network is actually capable of supporting billions of daily transactions. It's simply a different calculation of who the end user is. In BSV, it's not the node hobbyist; it's the merchant, the app developer, the billions of ordinary people paying for coffee, querying smart contracts, or timestamping invoices. None of this is inherently more righteous. But it is honest. BSV doesn't pretend that everyone must personally validate the entire chain for a payment system to be trustworthy. It leans on cryptographic proofs and competitive commercial services like the rest of our economy. You could argue that this restores Bitcoin to Satoshi's vision of a peer-to-peer cash system where trust is engineered through incentives, not socially policed by enthusiasts running Raspberry Pis. But, there's always a but… This all poses a thorny education challenge. People have been taught for 15 years that certain UX flows are normal because they grew from BTC's assumptions. Put in your seed phrase, and watch your coins appear. Fast sync times. Small chain, lightweight everything. But that's only one vision. It was never the only one. And ironically, it's the version that scales the least. Under pressure, that UX fails the common user, too. It just doesn't happen very often because aside from the 2017 bull run and the 2023 Ordinals craze, BTC gets very little real use from real people, so the congestion doesn't get experienced by many. In BSV, we will have to keep explaining why some wallets might ask you to track Merkle paths, why your node might take longer to sync, and why there's professional infrastructure where you expected hobbyist tinkering. These trade-offs aren't bugs. They're intentional, designed to support a network that can shoulder the world's economic data. In a way, it's poetic. The same debates echo from Bitcoin's earliest days: how many nodes should there be? How big can blocks get? Who is this system for? BTC's answers to those questions hardened dogma into gospel. BSV simply dares to answer differently. And as the world starts hunting for a data ledger that can carry actual commerce rather than speculative cycles, maybe we should reconsider who made the wiser bargain. Time will tell. Watch: Lessons on Triple Entry Accounting from Malta's TEA Conference
