U.K. Tax Authority Seeks Expanded Access to Cryptoasset Data

HM Revenue & Customs (HMRC) is pursuing expanded powers to obtain cryptoasset information, including authority to request customer records directly from service providers and update rules for inspecting software and electronic records.

The proposed definition of a cryptoasset service provider could include noncustodial wallet software, blockchain explorers, hardware-wallet manufacturers and tax-software providers. Recap, a U.K. crypto tax software company, warned that the definition could cover a broad range of businesses.

The proposed powers would allow HMRC to request customer information directly from cryptoasset service providers and update rules for examining software and electronic records. The development continues earlier coverage of HMRC’s proposed direct access to crypto data.

The main risk involves connecting investors’ names, addresses and tax identities with on-chain wallet addresses. Transaction records for assets such as Bitcoin (BTC) are publicly visible, so an identity linked to a wallet could expose long-term activity histories.

Recap warned that the resulting exposure could increase the risks of data breaches, extortion and threats to personal safety.