Will overseas encryption assets be subject to scrutiny? This article will help you understand CARF.

1. Introduction

The official website of the U.S. government shows that the Internal Revenue Service (IRS) officially submitted a proposal to the White House on November 14. This proposal is titled “Broker Digital Transaction Reporting,” and its core content is to implement the “Crypto-Asset Reporting Framework” (CARF) launched by the Organization for Economic Cooperation and Development (OECD). Once CARF is implemented, the IRS will be able to obtain data on overseas crypto asset accounts held by U.S. citizens. Currently, the White House is reviewing the proposal, and taking this event as an opportunity, this article will provide an overview and introduction to the CARF framework—What is CARF? How has it developed? Has it started implementation?

2. What is CARF

The “Crypto Asset Reporting Framework” (CARF) is a global tax transparency standard proposed by the Organisation for Economic Co-operation and Development (OECD) in 2022. Its core mechanism requires member countries to automatically exchange information about their citizens' holdings and transactions of crypto assets to effectively curb cross-border tax evasion.

The regulatory body of CARF is very clear; it does not regulate the crypto assets themselves, but rather the entities providing services related to crypto assets. Under its framework, any institution that provides commercial services to the public involving transferable crypto assets such as trading, custody, exchange, and management may be considered a Reporting Crypto-Asset Service Provider (RCASP) and must fulfill reporting obligations. Typical RCASPs include centralized exchanges, custodial wallet service providers, OTC and brokers, issuers providing stablecoin trading or redemption services, as well as those institutions that, although operating under the name of DeFi, have identifiable and operational entities behind them (such as centralized front ends and yield management platforms).

According to the CARF framework, RCASP needs to carry out the following tasks for users (including institutional and individual users): (1) Customer due diligence to identify their tax residency status, etc.; (2) Record and track user accounts, classify and statistically analyze information related to transactions of cryptocurrency assets such as exchanges, disposals, acquisitions, and transfers. These records and data must be kept for at least five years. Each year, RCASP will submit due diligence information and asset information to the tax authorities of the jurisdiction in which it operates. Subsequently, an automatic international information exchange will occur between tax authorities—this effectively establishes a global tax information network in the cryptocurrency field, filling the gaps in the existing automatic exchange standard for financial account tax information (CRS) in the cryptocurrency area.

The CARF rule system consists of three main parts:

(1) CARF Rules and Related Comments

These rules and comments are designed around four key elements: i) the scope of covered crypto assets; ii) entities and individuals required to comply with data collection and reporting requirements; iii) transactions that must be reported and the information related to such transactions that must be reported; iv) due diligence procedures for identifying crypto asset users and controllers and determining the relevant tax jurisdictions for reporting and exchange purposes; countries may convert these rules into domestic law to collect and exchange relevant declaration information of their crypto asset service providers with other countries that have agreements.

(2) Bilateral or multilateral tax agreements

Agreements or arrangements between bilateral or multilateral competent authorities regarding automatic exchange of information, reached in accordance with CARF rules and related comments.

(3) Electronic Declaration Format

The electronic format (XML format) used by the competent authorities for exchanging CARF information, as well as the electronic format used by cryptocurrency service providers to report CARF information to tax authorities (as stipulated by domestic law).

3. Development and Implementation of CARF

Since its initial launch to widespread acceptance, the development of CARF reflects the international community's embrace of the trend towards transparency in cryptocurrency taxation.

2022: At the beginning of 2022, the OECD published a consultation document on the proposed rule framework, and later in October, released the final version of the Crypto-Asset Reporting Framework, proposing a global standard for the cross-border exchange of information on crypto assets, marking the preliminary formation of the CARF rules.

2023: The OECD released the first version of the XML Schema, FAQ, due diligence and declaration operation guidelines, establishing executable technical and process rules for CARF.

2024: The OECD releases the final version of the CARF XML Schema, and countries begin preparations for domestic legislation and integration work.

CARF itself is an international standard established by the OECD and does not have direct legal effect. It must be implemented through the commitments of various countries to join, legislative transformation, and system integration. In other words, the timing of CARF's implementation in different countries/regions depends on the specific commitments made by each country. According to OECD data, as of November 2025, 74 jurisdictions have officially committed to implementing CARF in 2027 or 2028, of which 53 jurisdictions have signed CARF bilateral or multilateral competent authority agreements (CARF MCAA). The European Union has already passed the DAC8 directive (the 8th directive on administrative cooperation) in 2023, requiring all EU member states to start collecting information from January 1, 2026, and to complete the first round of cross-border information exchange by September 30, 2027. Other countries/regions are also gradually advancing CARF.

According to the official disclosure from the OECD, as of November 24, 2025, the commitments from various jurisdictions are as follows:

4. Conclusion

CARF is known as the CRS of the crypto world, aiming to establish a unified global framework for tax information exchange to address the regulatory issues surrounding crypto asset taxation and to provide tax authorities in various countries with more third-party data regarding the crypto activities of tax residents. This framework requires RCASPs to comply with detailed KYC requirements to ensure the accurate and timely reporting of relevant information to tax authorities. The gradual implementation of CARF showcases the trend towards transparency in global crypto taxation and the increasing clarity of crypto regulation, while promoting tax fairness, enhancing public trust, and increasing government revenue, it also imposes higher compliance requirements on intermediaries and tax residents.