HM Revenue & Customs (HMRC), the UK government agency responsible for collecting taxes, managing customs, and administering payments, sent nearly 65,000 nudge letters to crypto investors in the 2024–25 tax year. This more than doubles the 27,700 sent in 2023–24, totaling over 100,000 letters in four years. The letters urge investors to correct undeclared capital gains from crypto transactions. Exchange Data Drives Targeted Probes HMRC gathers transaction data from UK crypto exchanges to identify tax discrepancies. Disposals, including coin swaps, are taxable as capital gains. From 2026, the OECD’s Crypto-Assets Reporting Framework will provide automatic global exchange data, enhancing HMRC’s oversight. Rising Crypto Use Spurs Scrutiny The Financial Conduct Authority estimates seven million UK adults hold crypto, up from five million in 2022. Complex tax rules catch many investors unaware of taxable events like swaps. Compliance demands grow as crypto prices climb. Nudge Letters Encourage Compliance Recipients have 60 days to respond or disclose via HMRC’s Cryptoasset Disclosure Facility to avoid penalties. Failure to comply triggers formal investigations, with penalties for late payments on undeclared gains.