Navigating the Crypto-Asset Reporting Framework

Unlike traditional monetary driven transactions, at present tax authorities have recognised that they do not have the information they need to monitor crypto-asset revenues, especially when it comes to sharing details of trades that are conducted across borders.

Because taxes may need to be paid on crypto transactions, tax authorities are aware that there are and will continue to be gaps between what is declared and what should have been paid and collected.

To address this gap, the OECD has published the Crypto-Asset Reporting Framework (CARF) [1] which is supported by some amendments to the OECD Common Reporting Standard (CRS). These new rules are implemented in the EU under an update to Directive 2011/16/EU and are also known as DAC8.

The UK has published its draft regulations [2] (which include reporting on domestic customers), and adoption is expected by the 100-plus jurisdictions which have already adopted CRS.

CARF sets out how to report cryptocurrency transactions, as well as promoting compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. The framework, with multi-country support, will help improve crypto-asset transparency through annual, automatic exchange of information, very much in the same way that CRS and FATCA reporting is currently done. 

The difference is that this framework is related to crypto-asset transactions among participating jurisdictions whose tax residents engage in such activity.

Crypto-assets are defined as any digital representation of value that relies on a cryptographically secured distributed ledger (or a similar technology) to validate and secure transactions. This includes stable coins, derivatives issued in the form of a crypto-asset and certain non-fungible tokens (NFTs).

For those organisations that are familiar with reporting account balances at the end of the year detailing all non-domestic account holders with investments in their financial institutions, then the reporting obligations will be extended to factor in CARF. For those institutions that operate solely in crypto-assets, this is likely to be the first time they have had to consider CRS filing and reporting obligations.

These amendments bring within the CRS scope certain e-money products and Central Bank Digital Currencies and increase the amount of customer due diligence information reported. These updates will also ensure that indirect investments in crypto-assets through derivatives are covered by CRS.

Formally adopted on 17th October 2023, this directive amending EU rules on administrative cooperation in the area of taxation allows local tax authorities to implement their own variant of the CARF framework and collect the necessary information that can be shared with other member states. Member States should incorporate DAC8 into their national law by 31 December 2025.

The EU Commission also builds on the definitions used in Market in Crypto-assets Regulation (MiCA) for service providers and crypto-assets, which provides the conditions for accessing the EU crypto-asset market and anti-money laundering rules.

Onboarding: Conduct due diligence procedures that identify reportable users, i.e., those who use the service provider to trade and exchange their crypto-assets. The identification of such reportable users would be conducted through self-certification which is similar to CRS/FATCA requirements. This should also factor in the AML and other due diligence exercises before dealing with users.

Data gathering: Collect and analyse and prepare suitable filings ready to submit information to the relevant tax authority during the following tax year. It is expected that reporting deadlines will mirror those under CRS, which range from January to August, depending on jurisdiction.  
The reporting CASP will also have to inform each relevant individual that their personal information will be collected and reported, adhering to GDPR policies.

Submission and acceptance: The electronic files will be submitted to the CASP’s local competent authority via a mandatory automatic electronic exchange of information process. The local authority will confirm receipt and later confirm acceptance of the reported details or follow up with queries should any discrepancies be identified. 

The new rules and reporting requirements for crypto-assets, e-money and digital currencies will apply from 1 January 2026.

This means that before 31 December 2025, all finance and trading platforms that will record these transactions need to be capable of holding the required information that will need to be reported. 

Data will need to be collected on all cross-border trades from 1 January 2026 to 31 December 2026.

Data reports will need to be extracted after 1 January 2027 and likely prepared as .XML files ready for electronic submission to the local tax authorities. The first submissions will need to be made during 2027.

At Evelyn Partners, our Digital Services and Operational Taxes teams already support clients with their reporting obligations depending on their business models.

We work with clients in the United Kingdom, all 27 EU Member States and, and beyond and continue to support them as the DAC initiatives are released by the EU Commission and new reporting obligations are issued by HMRC and other tax authorities.

At Evelyn Partners we have the experts who can help. You can speak to your usual Evelyn Partners contact, book a free initial consultation online, or call 020 7189 2400.

[1] - https://www.oecd.org/en/about/news/announcements/2024/10/crypto-asset-reporting-framework-and-amended-common-reporting-standard-oecd-releases-it-format-for-transmitting-information-and-issues-interpretative-guidance.html

[2] - https://www.gov.uk/government/consultations/the-cryptoasset-service-providers-due-diligence-and-reporting-requirements-regulations-2025