The White House is currently evaluating a proposed Internal Revenue Service regulation aimed at strengthening tax oversight of American citizens’ cryptocurrency assets held in foreign jurisdictions. This initiative aligns with the Crypto-Asset Reporting Framework (CARF), an international tax transparency standard developed by the Organisation for Economic Co-operation and Development (OECD).
Under the proposed framework, U.S. authorities would gain expanded visibility into digital asset transactions conducted through offshore exchanges and wallet providers. The CARF agreement establishes standardized reporting requirements for financial institutions handling cryptocurrency transactions, creating an automated exchange mechanism between participating nations’ tax authorities.
This regulatory development represents a significant step toward closing compliance gaps in the digital asset space, where cross-border transactions have historically presented challenges for tax enforcement. The framework would require foreign cryptocurrency service providers to systematically report account information and transaction details of U.S. taxpayers to the IRS, mirroring existing protocols for traditional financial accounts under the Foreign Account Tax Compliance Act (FATCA).
The Treasury Department’s push for CARF adoption reflects growing global consensus on establishing comprehensive tax reporting standards for cryptocurrency markets. Implementation would mark a substantial evolution in how tax authorities worldwide monitor and verify cryptocurrency-related income, ensuring digital assets receive equivalent treatment to conventional financial instruments for tax compliance purposes.
