The White House is currently reviewing a proposal from the Internal Revenue Service (IRS) to join the global Crypto-Asset Reporting Framework (CARF). This framework would grant the tax department access to Americans’ foreign cryptocurrency account data.
The adoption of the “Broker Digital Transaction Reporting” proposal, which was submitted to the White House last Friday, would align the US crypto tax system with that of 72 other countries that have committed to implementing CARF by 2028. Although the IRS did not categorize the proposal as “economically significant,” the rule would necessitate increased stringency from Americans in reporting capital gains tax from foreign crypto platforms.
In late July, a report from the White House on crypto policy recommendations indicated that implementing CARF would discourage American taxpayers from moving their digital assets to offshore exchanges. This measure aims to prevent US crypto platforms from being placed at a disadvantage.
Global Adoption of CARF
CARF is scheduled to be rolled out in 2027, with 50 countries, including Brazil, Indonesia, Italy, Spain, Mexico, and the UK, participating. An additional 23 countries, including the United States, have indicated their commitment to implementing CARF by 2028.
The Organization for Economic Cooperation and Development (OECD) established CARF in late 2022. Its purpose is to enable member nations to share cryptocurrency data, thereby aiding in the fight against international tax evasion. The nature of cryptocurrency, with its cross-border instant transfers, self-custody wallets outside traditional banking systems, and pseudonymous transactions, has presented challenges for tax authorities.
Imminent Changes to US Crypto Tax Rules
The United States is preparing to introduce more stringent domestic crypto tax rules, with the rollout of 1099-DA forms slated for January 2026. These forms will require US-based crypto exchanges to report more comprehensive transaction data, encompassing both incoming and outgoing transfers.
Clinton Donnelly, a US-based crypto tax lawyer, stated that the 1099-DA forms will signify the beginning of the end for crypto anonymity. He explained that currently, the IRS lacks immediate visibility into all blockchain activities. However, he anticipates this will change, stating, “A few years down the road, with better tools and data integration, they’ll be able to scan blockchain networks at scale to identify major non-reporters, and target them for audits.”
“Right now, the IRS doesn’t have instant visibility into everything you’re doing on the blockchain. However, that’s about to change. A few years down the road, with better tools and data integration, they’ll be able to scan blockchain networks at scale to identify major non-reporters, and target them for audits.”