The UK is enhancing its regulatory scrutiny on the crypto sector with the HMRC issuing nearly 65,000 warning letters to UK investors in the 2024-25 tax year. This represents a 134% increase from the previous year. Meanwhile, in the EU, Revolut and Relai have secured MiCA licences, signalling readiness to expand their operations across the European Economic Area (EEA).
These developments highlight the critical importance of compliance with UK tax obligations, Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) rules and evolving international frameworks such as the Crypto-Asset Reporting Framework (CARF) and the Markets in Crypto-Assets (MiCA) Regulation. With an estimated 7 million UK adults now holding cryptoassets, the risks of non-compliance include HMRC investigations, financial penalties and reputational damage.
Key Developments
- HMRC Intensifies Tax Enforcement on Crypto Investors
HMRC has increased its use of so-called “nudge letters”, encouraging investors to correct their tax records voluntarily before formal investigations begin. These actions leverage data obtained from crypto exchanges to detect discrepancies.
Key issues include:
- Taxable Events: Coin-to-coin swaps, selling, spending, mining, staking rewards, airdrops and employment crypto trigger Capital Gains Tax (CGT) or Income Tax.
- Rate Increases: CGT rose to 18% (basic) and 24% (higher) for disposals after 30 October 2024.
- Upcoming CARF Implementation: From January 2026, exchanges report user data across 70 jurisdictions; HMRC’s first deadline is 31 May 2027, enhancing visibility and enforcement.
Over 100,000 letters in four years reflect surging adoption and asset values, with confusion over rules driving errors.
- Revolut and Relai Secure MiCA Licence
Revolut and Relai have both secured MiCA licences, Revolut in Cyprus for full EEA crypto services and Relai in France as one of the first Bitcoin-only platforms. This facilitates both firms’ EU-wide operations under the new regulatory framework.
- Revolut obtained a MiCA licence as a Crypto-Asset Service Provider (CASP) from the Cyprus Securities and Exchange Commission, enabling its expanded EEA-wide services such as:
- ‘Crypto 2.0’: Access to 280+ tokens, zero-fee staking, and 1:1 stablecoin-to-USD conversions.
- ‘Revolut X’: A standalone crypto exchange initially launched in the UK, now being extended to the EEA with mobile app functionality.
- Swiss Bitcoin-only app ‘Relai’ gained approval as a CASP by the French Financial Markets Authority, enabling it to:
- Promote services across EEA without further authorisations.
- Ensure self-custody focus through non-custodial wallet, automatic DCA and lightning network integration.
These approvals indicate that MiCA is now operational. However, debate continues over the recognition of licences granted in certain jurisdictions (e.g., Malta and Luxembourg) under MiCA’s passporting regime.
Importance of Compliance and Applicable Regulations
Non-compliance exposes investors to HMRC investigations, back taxes, penalties (up to 200% of tax due) and asset seizures. Additionally, firms risk licence revocation, fines or bans under MiCA (EU) 2023/1114, which mandates authorisation for CASPs, stablecoin issuers and trading platforms.
Proposed updates to the regulatory framework include the FCA CP25/25, which aims to extend Handbook rules, such as SYSC, SMCR and Consumer Duty to crypto firms, and HM Treasury MLRs amendments enhancing Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) for cryptoasset activities. Focus areas: operational resilience (private keys, smart contracts), tax transparency via CARF, and cross-border harmonisation.
From a regulatory perspective, MiCA, CARF and UK Crypto Roadmap demand risk-based approaches; failures lead to enforcement, as seen in HMRC’s surge and MiCA’s passporting requirements.
Regulatory Implications and Compliance Lessons
These updates signal stricter oversight, with key takeaways being:
- Accurate tax reporting: Use HMRC tools and digital solutions to track disposals, staking rewards, and calculate gains/losses.
- Authorisation is critical: CASPs must secure MiCA or FCA approval before marketing services in the EEA or UK.
- Strengthen financial crime controls: Firms should review AML/CTF frameworks, conduct thorough CDD/EDD checks, and monitor transactions per FATF and MLR standards.
- Consumer Protection: Ensure compliance with applicable rules on disclosures, suitability, and complaint handling, especially if UK regulation aligns with the Consumer Duty regime.
- CARF readiness: Firms must prepare systems to comply with automated reporting from January 2026.
HMRC’s 65,000 letters and MiCA milestones highlight escalating risks of non-compliance amid crypto growth. Investors face personal liability; firms risk market exclusion. Proactive compliance via tools, training, and expert advice ensure sustainability in a developing a maturing sector.
How Complyport Can Help
Complyport offers tailored solutions to support compliance with cross-border regulation and crypto growth. Our services include:
- AML/CTF/CPF Risk Assessments and Gap Analyses;
- CDD and EDD Policy Reviews;
- Cross Jurisdictional Rules Mapping;
- Operational Resilience and Private Key Management reviews;
- MiCA Authorisation Applications and CASP Compliance;
- Staff Training on Crypto-Assets Reporting Framework, MiCA, and Crypto Tax Rules; and
- Regulatory Guidance and Compliance Advisory Support.
Book a Meeting with a Complyport SME
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