Global authorities usher in a new age of strict oversight to combat cryptocurrency tax evasion

Tax agencies around the globe are intensifying their pursuit of undeclared cryptocurrency profits, with both the UK and US adopting robust strategies to eliminate loopholes and ensure compliance. As authorities gain real-time access to exchange information and enforce tougher reporting standards, investors who do not declare crypto-related earnings are increasingly vulnerable to audits, penalties, and legal repercussions.

In the United Kingdom, Her Majesty's Revenue and Customs (HMRC) issued 65,000 warning notices to individuals suspected of underreporting crypto taxes for the 2024/25 tax year—more than twice the previous year’s total. These notifications are directed at those who may have failed to declare profits from cryptocurrency trading, spending, or transfers. HMRC’s crackdown is expected to escalate with the adoption of a new OECD Crypto-Assets Reporting Framework, which will begin automatically sharing user data from leading international exchanges with UK tax authorities in 2026. “The government is prioritizing the closure of tax gaps in areas such as crypto trading,” explained Neela Chauhan of UHY Hacker Young, noting that Chancellor Rachel Reeves’ forthcoming budget will likely reinforce this enforcement drive, according to a

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At the same time, the U.S. Internal Revenue Service (IRS) has rolled out major updates to crypto tax regulations, including the compulsory use of Form 1099-DA. From January 1, 2025, U.S. crypto exchanges will be required to submit detailed transaction records directly to the IRS, allowing for thorough cross-verification of taxpayer returns. The IRS has also moved to a “wallet-by-wallet” accounting approach, obliging investors to separately track gains and losses for each wallet or exchange account, replacing the previous system that permitted asset aggregation. Furthermore, earnings from mining, staking, airdrops, and crypto payments are now treated as regular income, with non-disclosure subject to fines or even criminal prosecution, as reported by a

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Failing to comply can have serious consequences. The IRS is utilizing artificial intelligence to identify unreported crypto gains, while HMRC’s global data-sharing arrangements provide unparalleled insight into international transactions. U.S. taxpayers who omit crypto activities from their filings face audits, retroactive taxes, and interest. “Claiming ignorance is no longer acceptable,” the IRS recently stated, stressing that “all transactions must be properly recorded.”

Experts recommend that investors maintain meticulous records, use specialized crypto tax software, and seek professional advice to navigate the evolving regulations. The UK’s budget announcement on November 26 is anticipated to further strengthen reporting obligations, possibly extending HMRC’s oversight to e-commerce and other industries.

With regulators worldwide adopting standards like the OECD’s, the window for evading crypto taxes is closing. Those who do not adjust to these changes risk not only financial sanctions but also damage to their reputation and potential legal consequences in a more transparent digital marketplace.