HMRC Plans to Expand Crypto Asset Information Powers, Experts Warn of Security Risks

On October 8, according to Forbes, the UK's HMRC is proposing to extend financial institution notification powers to crypto asset service providers, and update regulations concerning computer records and software. Ministers have not yet made a final decision on the reform plans.

Unlike traditional bank records, bitcoin transactions are recorded on public blockchains. Once names, residential addresses, and tax identifiers are linked to wallet addresses, the associated information becomes permanently traceable, carrying exposure risks far greater than those of conventional banking records. Crypto tax software provider Recap warns that the proposal's definitions are overly broad and could inadvertently sweep tax software, wallet software, blockchain explorers, and hardware wallet manufacturers—who do not actually hold client funds—into the regulatory scope.

Security experts point out that physical attacks targeting crypto holders across Europe have surged in recent years, with France recording 19 cases in 2025 alone. If databases linking user identities to on-chain addresses are compromised, they would become high-value targets for criminal organizations. French tax officials have previously been accused of leveraging government tax systems to query information about crypto investors and selling it to criminal networks.