Will overseas crypto assets be subject to scrutiny? This article will guide you through understanding CARF.

1. Introduction

According to the official website of the US government, the Internal Revenue Service (IRS) formally submitted a proposal to the White House on November 14. This proposal, titled "Broker Digital Transaction Reporting," focuses on implementing the "Crypto-Asset Reporting Framework" (CARF) launched by the OECD. Once CARF is implemented, the IRS will be able to obtain data on overseas cryptocurrency accounts held by US citizens. Currently, the White House is reviewing the proposal. Taking this opportunity, this article will provide an overview and introduction to the CARF framework—what is CARF? How did it develop? Has it been implemented?

2. What is CARF? The Crypto Asset Reporting Framework (CARF) is a global tax transparency standard proposed by the Organization for Economic Cooperation and Development (OECD) in 2022. Its core mechanism requires member countries to automatically exchange information on their citizens' holdings and transactions of crypto assets in order to effectively curb cross-border tax evasion. The regulatory body of CARF is very clear: it does not regulate crypto assets themselves, but rather "the entities that provide crypto asset services." Under its framework, any institution that provides commercial services such as trading, custody, exchange, and management of transferable crypto assets to the public may be considered a Reporting Crypto-Asset Service Provider (RCASP) and must assume reporting obligations. Typical RCASPs include centralized exchanges, custody wallet service providers, OTC and brokerage firms, issuers that provide stablecoin buying, selling, or redemption services, and those institutions that, while using the name DeFi, have identifiable and operational entities behind them (such as centralized front-ends and yield management platforms). According to the CARF framework, RCASPs are required to conduct the following work with users (including institutional and individual users): (1) conduct customer due diligence to identify their tax residency status, etc.; (2) record and track user accounts, and classify and statistically analyze information on crypto asset-related exchanges, disposals, acquisitions, and transfers. These records and data must be retained for at least five years. Each year, RCASP submits due diligence and asset information to the tax authorities in its jurisdiction. Then, these tax authorities automatically exchange information internationally—essentially creating a global tax information network in the crypto asset space, filling the gaps in the existing Common Reporting Standard (CRS) for automatic exchange of financial account tax information in the crypto domain. The CARF rules 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 crypto assets covered; ii) the entities and individuals required to comply with data collection and reporting requirements; iii) the transactions that must be reported and the information that must be reported in connection with such transactions; iv) the due diligence procedures for identifying crypto asset users and controllers and determining the relevant tax jurisdictions for reporting and exchange purposes; countries may translate the rules into domestic law for the purpose of collecting and exchanging relevant reporting information of their crypto asset service providers with other countries with which they have agreements. (2) Bilateral or Multilateral Tax Treaties Agreements or arrangements between bilateral or multilateral competent authorities concerning the automatic exchange of information, reached in accordance with the CARF Rules and related comments. (3) Electronic Filing Formats Electronic formats (XML format) used by competent authorities to exchange CARF information, and electronic formats used by reporting encrypted asset service providers to report CARF information to tax authorities (as required by domestic law). 3. Development and Implementation of CARF From its initial launch to its widespread acceptance, the development of CARF reflects the international community's embrace of the trend towards greater transparency in crypto taxation. 2022: In early 2022, the OECD released a consultation paper on proposed rules, followed by the final version of the Crypto-Asset Reporting Framework in October, proposing a globally unified standard for cross-border information exchange of crypto assets, marking the initial formation of the CARF rules. 2023: The OECD released the initial version of the XML Schema, FAQs, and due diligence and reporting guidelines, establishing executable technical and procedural rules for CARF. 2024: The OECD released the final version of the CARF XML Schema, and countries began preparing domestic legislation and alignment work. CARF itself is an international standard developed by the OECD and does not have direct legal force. It must be implemented through national commitments to join, legislative transformation, and system alignment. In other words, the timing of CARF implementation in different countries/regions depends on the specific commitments made by each country. OECD data shows that as of November 2025, 74 jurisdictions had formally committed to implementing CARF in 2027 or 2028, of which 53 jurisdictions had signed bilateral or multilateral competent authority agreements (CARF MCAA). The EU, in 2023, adopted Directive DAC8 (Administrative Cooperation Directive No. 8), requiring EU member states to begin 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 implementation. According to official OECD disclosures, as of November 24, 2025, the commitments made by various jurisdictions are as follows: [Image of image: https://img.jinse.cn/7417693_image3.png] 4. Conclusion CARF, hailed as the CRS of the crypto world, aims to establish a unified global framework for exchanging tax information, addressing the tax regulation of crypto assets, and providing tax authorities in various countries with more third-party data on the crypto activities of tax residents. This framework requires RCASP to comply with detailed KYC requirements, ensuring accurate and timely reporting of relevant information to tax authorities. The gradual implementation of CARF demonstrates a global trend towards greater transparency in crypto taxation and clearer crypto regulation. While promoting tax fairness, enhancing public trust, and increasing government revenue, it also places higher compliance requirements on intermediaries and taxpayers.