48 Countries Pledge to Implement CARF: Stakeholder Positions and the Future Framework for Crypto Tax Transparency
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48 Countries Pledge to Implement CARF: Stakeholder Positions and the Future Framework for Crypto Tax Transparency
To achieve the implementation of the Crypto-Asset Reporting Framework (CARF) globally by 2027, strong support from all stakeholders is required.
Navigating Web3 tides with focused insightsAuthor: TaxDAO
On November 10, 48 countries—including the United States, Canada, Germany, and Japan—pledged to combat tax evasion related to crypto assets through the Crypto-Asset Reporting Framework (CARF), with plans to implement the framework by 2027. Achieving global enforcement by 2027 will require strong support from all stakeholders.
Short-Term Impacts of Committing to CARF Implementation
The CARF emerged in response to tax challenges posed by the rapid development of crypto asset markets and growing international attention on crypto taxation cooperation. CARF establishes a foundation for automatic exchange of tax information between cryptocurrency exchanges and tax authorities—an effort jointly undertaken by signatory countries to strengthen tax compliance and curb tax evasion in the fast-growing crypto market.
By promoting cooperation and information sharing, CARF represents a significant step toward maintaining financial transparency and combating global tax evasion. Details regarding CARF implementation were further discussed during the 16th Global Forum Plenary Meeting held in Lisbon, Portugal, from November 29 to December 1, 2023. In response to the G20’s 2022 call for broad implementation of the Crypto-Asset Reporting Framework (CARF) and appeals from relevant countries to revise the AEOI standard, the Global Forum established a new voluntary group—the CARF Group. Considering the increasing maturity of EOIR and AEOI standards, the Global Forum also agreed to adjust its peer review and monitoring processes to enhance its ability to serve members in the future.
Notably, the list of participating countries includes all 38 OECD member states and extends to traditional offshore financial havens such as the Cayman Islands and Gibraltar, British Overseas Territories. However, the absence of major markets including China, Hong Kong China, the UAE, Russia, Turkey, and India, the lack of nearly all African nations (except South Africa), and only two Latin American countries (Chile and Brazil) participating, all weaken CARF's global impact. The path toward a globally transparent crypto asset tax framework remains long and challenging.
Stakeholder Perspectives
Countries committing to CARF implementation do not hold uniform positions. Established financial powerhouses like the UK have expressed strong support. The UK Treasury previously estimated that tax avoidance in crypto could range from 55% to 95%, and views participation in CARF as fostering a favorable international environment for regulating crypto taxation. However, developing nations exhibit mixed sentiments. Supporters include Chile, where the Finance Minister stated that CARF would help maintain advancing global fiscal transparency. Chile’s audit officials noted that automated information exchange would accelerate and improve audit efficiency, while emphasizing the need for proper handling and protection of financial consumer data. South Africa, the only African nation to join CARF, said adherence to the agreement would help the country keep pace with the rapid evolution of crypto asset markets.
Some countries have yet to reach internal consensus on CARF implementation. Brazil, although a signatory, has seen intense debate in its Congress recently. Opponents argue that CARF implementation would reduce the efficiency of tax litigation and significantly increase administrative costs.
CARF implementation signals governments’ intent to obtain information and expand control over crypto asset movements. Yet differing national attitudes reflect varied perspectives. Commentators note that CARF rules must be transposed into domestic tax legislation. To comply with CARF, many companies will need to adjust their tax compliance procedures, potentially increasing operational costs temporarily. These compliance burdens may be passed on to suppliers or ultimately result in fees charged to consumers.
CARF implementation will also affect exchanges and traders. Exchanges are required under CARF to report cryptocurrency transactions. Meanwhile, during bull markets, tens of billions of dollars flow from traditional financial systems into crypto exchanges and platforms. Traditional financial institutions seek to counter this capital outflow—some banks began offering internal crypto trading services starting in 2021, notably without being subject to CARF standards under the framework.
Requiring exchanges and platforms to track crypto transactions may also impact the development of centralized cryptocurrency exchanges, potentially benefiting decentralized alternatives such as DEXs.
Traders will also feel CARF’s effects, as impacts on exchanges trickle down to end users. Reported crypto transactions from exchanges will become tax assessment data for governments, directly affecting the tax obligations of individual crypto traders.
Future of Cryptocurrency Tax Transparency Frameworks
Although CARF represents a significant international effort toward standardized crypto taxation, it is not the only agreement. Other international initiatives for exchanging tax information on cryptocurrencies are also progressing.
In October this year, the Council of the European Union formally adopted DAC8. DAC8 is a cryptocurrency tax reporting rule granting tax authorities jurisdiction to monitor and assess every crypto transaction within any EU member state. Analysis by Coinbase notes that DAC8’s crypto-related legal provisions complement anti-money laundering rules under the MiCA framework. DAC8 requires all crypto-asset service providers operating in the EU to report transactions of EU customers, supporting anti-money laundering and anti-tax evasion efforts. Beyond crypto assets, DAC8 also applies to financial institutions issuing central bank digital currencies (CBDCs).
As international regulatory frameworks, neither CARF nor DAC8 takes effect automatically—they require national legislation by member states for implementation. Based on past experience, DAC8 is expected to be implemented swiftly within the EU, whereas full implementation of CARF will take more time. The convergence of CARF and DAC8 reflects ongoing global efforts toward crypto tax regulation.
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