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CARF: Global Crypto Tax Transparency

Last Updated on June 20, 2025 by Arnaud Collignon

Overview of the Crypto-Asset Reporting Framework (CARF) and its implications for global tax transparency.

Key Takeaways:

  • Global Initiative for Tax Transparency: The Crypto-Asset Reporting Framework (CARF) is an OECD-led international initiative designed to combat tax evasion related to cryptocurrencies and digital assets by promoting the automatic exchange of information between tax authorities.
  • Addressing Tax Evasion Risks: The lack of centralized control, pseudo-anonymity, and digital nature of cryptocurrencies have been identified as significant facilitators of tax evasion. Estimates suggest substantial lost tax revenue globally due to undeclared crypto gains.
  • Obligations for Crypto-Asset Service Providers (CASPs): CARF mandates that CASPs collect specific user information (tax residence, TINs) and report three types of crypto-asset transactions: exchanges between crypto and fiat, exchanges between different crypto-assets, and transfers of crypto-assets (including payments for goods/services and transfers to unhosted wallets).
  • Broad Scope of “Crypto-Assets” and “CASPs”: The framework broadly defines “Crypto-Assets” to include cryptocurrencies, ERC-20 tokens, tradable NFTs, and other digital assets using DLT for payment or investment. “CASPs” are defined broadly to cover most cryptocurrency exchanges and other related providers, excluding purely decentralized operations.
  • Implementation Timeline: While the OECD has yet to confirm a global adoption timeline, the EU will adopt CARF rules from January 1, 2026, with first reports due in 2027. The US has independently published similar rules taking effect January 1, 2025, with potential future participation in CARF.
  • Extraterritorial Scope: Both the EU’s DAC8 and the proposed US rules have extraterritorial reach, requiring reporting on their residents even by CASPs not operating within their respective jurisdictions.
  • Focus on Centralized Control: For decentralized finance (De-Fi) applications, CARF rules apply where an entity or individual “exercises sufficient control over the platform” to comply with reporting requirements.

Detailed Review:

1. Purpose and Rationale of CARF:

The Crypto-Asset Reporting Framework (CARF) is a global effort by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes aimed at enhancing tax transparency in the digital asset space. Its primary objective is to “promote the automatic exchange of information between countries to tackle emerging tax evasion risks related to cryptocurrency and digital assets.” The initiative stems from growing concerns that the inherent characteristics of cryptocurrencies, such as their “lack of centralised control, pseudo-anonymity and digitalised nature,” facilitate tax evasion.

  • Evidence of Tax Evasion:The European Commission estimated in 2022 that “12 million accounts may be reportable within the EU, and 100 million accounts globally.”
  • A 2022 Washington Post article noted that in 2014/15, “more than 5 million people were trading cryptocurrencies, but fewer than 1,000 taxpayers included gains on their tax returns.”
  • The IMF suggested that a “20 percent tax on capital gains from crypto would have raised about $100 billion worldwide amid soaring prices in 2021” and noted that “the distinctive feature of crypto, arising from its anonymity, is naturally thought of as a particularly low probability of detection and hence particular appeal as a device for evasion.”
  • US senators estimated a US tax gap related to non-disclosure of cryptocurrency transactions at “$1.5 billion in 2024, and $28 billion over ‘the next 8 years’.”

2. Core Requirements and Scope:

CARF requires Crypto-Asset Service Providers (CASPs) to collect specific information on users, including their tax residences and tax identification numbers (TINs). This information is then reported to domestic tax authorities, who will exchange it internationally.

  • Definition of CASP: A CASP is defined as “any individual or entity that as a business provides a service to ‘effectuate’ transactions in Crypto-Assets.” This broad definition is “likely to apply to all cryptocurrency exchanges other than those that operate in a purely decentralized manner.” CASPs are expected to already be collecting Know-Your-Client (KYC) and Anti-Money Laundering (AML) documentation.
  • Definition of Crypto-Assets: The term is defined widely to include “assets which use cryptographically secured distributed ledger technology and which are used for payment or investment purposes.” This encompasses “cryptocurrencies, ERC-20 tokens, non-fungible tokens which can be traded on an exchange, as well as any other tokens or digital assets which meet the requirements.” Central Bank Digital Currencies (CBDCs) are expressly excluded, while stablecoins are included.
  • Reportable Transactions: CASPs will report annually on three types of transactions:
  1. Exchanges between crypto-assets and fiat currency.
  2. Exchanges between one or more forms of crypto-assets.
  3. Transfers of crypto-assets, including their use for goods/services and transfers to unhosted wallets.
  • Notably, the original proposal to report wallet addresses for unhosted wallet transfers was removed from the final rules.
  • Application to Decentralized Finance (De-Fi): The OECD rules apply to De-Fi applications “where an entity or individual exercises sufficient control over the platform that they could comply with the due diligence and reporting requirements under CARF.”

3. Adoption and Implementation Status:

CARF, alongside the amended Common Reporting Standard (CRS), forms the International Standards for Automatic Exchange of Information in Tax Matters, adopted by the OECD in June 2023. XML Schemas and Guidance for information transmission were published in October 2024.

  • European Union (EU) Adoption: The 27 EU Member States are required to adopt the rules from January 1, 2026, through an amendment to the Directive on Administrative Co-operation in the field of Taxation (DAC8). First reports in the EU will be submitted in 2027.
  • The EU’s DAC8 rules are intended to be aligned with the Markets in Crypto-Assets Regulation (MiCA).
  • DAC8 has an “extraterritorial in scope” requirement, mandating reporting on EU residents by cryptocurrency exchanges even if they are not operating within the EU.
  • Swedish Finance Minister Elisabeth Svantesson stated, “Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure – it is an important step forward in the fight against money laundering.”
  • Potential United States (US) Participation: The US does not participate in the OECD’s CRS but relies on FATCA. However, in August 2023, the US Treasury and IRS published their own proposed rules for crypto tax information reporting, effective January 1, 2025.
  • These proposed US rules “expressly allow for the US participating in an international exchange of information on cryptocurrencies, indicating that the US may participate in CARF.”
  • The information required for the US regime (Form 1099-DA) is compatible with CARF requirements.
  • The US rules also apply extraterritorially to exchanges dealing with US persons, regardless of their physical location.
  • First Exchanges: “First exchanges under both the CARF and the amended CRS are expected to commence in 2027.”

4. Distinctions from Other Frameworks:

  • Common Reporting Standard (CRS): CARF is a new framework specifically for crypto-assets, but it also contains broader revisions to the existing CRS, and together they form the international standards. CBDCs will be reportable under CRS, similar to bank accounts.
  • FATCA (US): The US currently relies on FATCA for unilateral data gathering, but its new proposed crypto reporting rules align with CARF’s requirements, suggesting potential future interoperability.