UK Government Cracks Down on Crypto KYC Violations With $400M Fine

The UK government is tightening rules around cryptocurrency by rolling out strict new Know-Your-Customer (KYC) requirements. These changes, effective January 1, 2026, aim to reduce tax evasion and criminal activity in the growing cryptocurrency sector. Those who fail to comply could face fines totaling up to $400 million.

What the New Rules Mean for Users

Under the new regulation, anyone using a UK-based crypto platform must provide full personal identification details. These include their full name, date of birth, home address, and a National Insurance number (or a similar tax ID).

This information must be shared with the crypto provider and may be reported to HM Revenue and Customs (HMRC), the UK’s tax authority. These requirements apply to anyone buying, selling, exchanging, or transferring crypto assets within the UK.

The goal is to prevent individuals from hiding behind anonymous accounts to avoid paying taxes or funding illicit activities. Crypto firms must collect and verify this information for every customer. Failure to do so could result in severe penalties, such as fines. Defaulting platforms may be fined up to $407 per user who lacks complete KYC data. Individual users may also face penalties for failing to provide their full information.

With millions of crypto users in the UK, officials estimate that total fines could reach as high as $543.9 million if there’s widespread non-compliance.

Government Takes Stronger Control

The new system will also allow HMRC to track profits from crypto trades more easily. Crypto profits exceeding $4,079 per year are taxable in the UK, with tax rates depending on the individual’s income level.

This move is part of the UK’s broader effort to bring the crypto market under proper financial regulation. Officials say the new rules will make it more difficult for criminals to use cryptocurrency to conceal illicit income and easier for the government to collect unpaid taxes.

Users and crypto firms now have until early 2026 to get their data and systems in order, or face tough financial consequences.

Global Crackdowns on KYC Failures

The UK is not alone in its push for stronger identity checks in crypto. In many countries, KYC is required to stop money laundering and terrorist financing. It ensures users open real-name accounts and complete verification before they can trade or withdraw funds.

Among earlier enforcement cases, South Korea’s largest crypto exchange, Upbit, came under fire from the Financial Intelligence Unit (FIU) for allegedly failing to enforce KYC rules properly. Regulators note that accounts without proper verification are often linked to illicit activities. As the crypto industry grows, governments worldwide are cracking down on KYC violations to protect financial systems and reduce crime.

The post UK Government Cracks Down on Crypto KYC Violations With $400M Fine appeared first on Cointab.