The UK is implementing stricter KYC regulations for crypto companies starting January 2026, aiming to deter tax evasion in the digital asset sector. The move by Her Majesty’s Revenue and Customs (HMRC) requires firms to collect detailed user data, including names, addresses, and national insurance numbers. These rules also mandate company information submission and track transactions for reporting unpaid capital gains or income tax on cryptocurrency proceeds. Non-compliance could result in fines of up to £300 per user. 2026 implementation follows declining trust in KYC processes within the UK crypto sector. A recent survey revealed only 17% regularly verify new clients, while 50% do so occasionally. The failure to strictly verify raises doubts about the effectiveness of KYC as a measure against criminal activity. This regulatory push follows data breaches like the 2020 Ledger incident that exposed personal information and led to phishing attacks. While UK authorities prioritize market integrity and consumer protection, privacy advocates are wary of potential misuse of collected data. The Financial Conduct Authority (FCA) acknowledges the need for transparent regulations that foster a secure and competitive crypto industry, while also balancing user privacy and innovation.