Will cryptocurrency start paying taxes in 2026? CARF regulatory updates tracking digital assets in 75 countries

OECD promotes CARF to take effect on January 1, 2026, with 75 countries implementing it to fill the gaps in crypto tax reporting. It requires reporting of fiat currency exchanges, asset transfers, and transactions, with documents retained for five years. Hong Kong will implement in 2028, covering stablecoins, derivatives, and certain NFTs.

What is CARF? A New Global Crypto Asset Tax Reporting Standard

CARF (Crypto-Asset Reporting Framework) is a globally coordinated framework for crypto asset tax transparency developed under the leadership of the Organisation for Economic Co-operation and Development (OECD). Proposed in 2022, it officially takes effect on January 1, 2026. Historically, due to the decentralized and anonymous nature of cryptocurrencies, their transfers and holdings often bypass traditional financial systems, making comprehensive transaction data difficult to obtain and leaving these activities outside existing regulations for a long time.

Therefore, the previously implemented CRS (Common Reporting Standard) mainly covered financial assets held by traditional financial institutions like banks and brokerages. A large volume of crypto transactions are conducted via wallets or decentralized platforms, often outside the scope of CRS reporting. CRS is a set of rules for international information exchange on cross-border financial accounts to enhance global tax transparency. In the crypto context, many assets are managed directly by individuals through wallets or circulate on platforms that may not be classified as CRS financial institutions, so the relevant transactions are not subject to CRS reporting obligations.

Against this backdrop, OECD and the G20 launched CARF to establish a cross-border tax information reporting and exchange mechanism for crypto assets, addressing the long-standing regulatory gaps in the crypto space. As CARF is gradually implemented, digital crypto assets are no longer a blind spot for tax authorities; related activities are being incorporated into clearer reporting systems, and previously blurred regulatory boundaries are becoming more defined.

According to CARF requirements, participating countries and regions must exchange crypto asset transaction tax information periodically in a standardized manner, sharing data with the tax jurisdiction of the taxpayer’s residence. In other words, the goal is to enable tax authorities in different countries/regions to monitor individual and institutional crypto transactions similarly to bank account supervision.

75 Countries Commit to Full Implementation and Taxation Starting 2026

Based on OECD reports, as of December 4, 2025, 75 jurisdictions have committed to implementing this framework. The initial group includes 48 countries and regions, which will start collecting CARF-related data from January 1, 2026, and plan to begin information exchange among member countries in 2027. This means crypto tax reporting will become a reality starting in 2026, with transaction data from 2026 being exchanged among tax authorities in 2027.

The first countries and regions to implement CARF include major European economies, Asia-Pacific financial centers, and some Latin American and African nations. This broad geographic coverage ensures the effectiveness of the regulatory framework, as cross-border transfers of crypto assets are highly convenient. If only a few countries adopt it, investors could easily transfer assets to non-implementing countries to evade regulation. The collective action of 75 jurisdictions essentially closes this regulatory arbitrage loophole.

To promote CARF implementation, OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes has established jurisdictional procedures related to CARF, clarifying which jurisdictions are committed to implementing CARF to ensure all relevant crypto asset service providers are covered. This standardized process ensures consistency across countries, avoiding regulatory arbitrage or overlapping regulations.

As an international financial hub, Hong Kong has also made clear implementation plans, aiming to adopt CARF in 2028, with automatic exchange of crypto transaction tax data with relevant tax jurisdictions under the reporting framework. Prior to this, Hong Kong conducted public consultations on December 9, 2025, regarding the implementation of the crypto asset reporting framework and amendments related to the Common Reporting Standard, outlining the overall direction for subsequent implementation.

Hong Kong CARF Implementation Timeline

2026: Complete necessary local legislative amendments

2027: Begin collecting reporting framework data

2028: Officially implement CARF

2029: Start implementing the revised Common Reporting Standard

Details of CARF Scope and Reporting Obligations

CARF does not regulate the crypto assets themselves but primarily targets entities providing crypto asset services. According to CARF’s definition, any entity that offers or intermediates crypto asset transactions for clients in a commercial manner qualifies as a crypto asset service provider. This includes centralized exchanges, crypto custody providers, certain decentralized exchanges (if offering custody or intermediary services), and crypto payment processors.

The scope of covered crypto assets includes those that can be held and transferred via decentralized means without traditional financial institutions, such as stablecoins, derivatives issued in crypto form, and certain NFTs. However, within the definition of “relevant crypto assets,” three types are excluded from reporting requirements: central bank digital currencies (CBDCs), tokens recognized as securities such as tokenized stocks or bonds, and investment instruments already regulated by traditional financial authorities.

Crypto service providers within CARF’s scope must fulfill corresponding information reporting obligations, including data collection and due diligence. They need to identify users, record account and transaction information, and report relevant crypto asset transactions according to regulations. Additionally, crypto service providers must retain all documentation for at least five years (starting from the deadline for submitting the reportable information).

Three Types of Transactions Requiring Reporting

Fiat-to-Crypto Exchange: Conversion between relevant crypto assets and fiat currency

Crypto-to-Crypto Exchange: Conversion between different crypto assets

Asset Transfer: Transfer of relevant crypto assets (including reportable retail payment transactions)

Furthermore, for crypto asset service providers not subject to reporting, taxpayers’ holdings of relevant crypto assets and transfers to non-virtual asset service providers or financial institution wallets also need to be reported to tax authorities. This means that even when using self-custody wallets, certain transactions may still require active reporting.

Practical Impact of CARF on Users and Platforms

Once implemented, CARF will gradually incorporate crypto asset transactions into a unified cross-border tax information exchange framework, enhancing the traceability and regulation of related transactions. Under this framework, when users exchange crypto assets for fiat, transfer between different crypto assets, or conduct cross-border transfers, relevant information may be subject to reporting and exchange according to established rules.

For crypto asset service providers, this raises higher compliance requirements for customer identification, transaction record retention, and risk control. KYC (Know Your Customer) procedures will become more stringent, and systems for recording and reporting transactions will need significant upgrades. Small and medium exchanges may face substantial compliance costs, while larger compliant exchanges could gain competitive advantages.

For individual users, it is essential to understand the framework to avoid compliance risks due to ignorance of the rules. The promotion of CARF has moved from advocacy to concrete implementation. As more countries and regions participate, crypto assets and related digital financial activities are being incorporated into clearer, more predictable cross-border regulatory frameworks. Users should start maintaining complete records of their crypto transactions and proactively report relevant income when filing taxes.