Organization For Economic Co-Operation And Development Debuts New Crypto Tax Reporting Framework

The Organization for Economic Co-operation and Development (OECD) has debuted a new crypto tax reporting framework called the Crypto-Asset Reporting Framework (CARF).

OECD noted in an announcement Monday that the CARF "responds to a G20 request" that reportedly asked the intergovernmental organization, which has more than 38 member nations, to develop a "framework for the automatic exchange of information between countries on crypto-assets."

Approved in August, the framework will ensure "the collection and automatic exchange of information on transactions for relevant crypto," as per the announcement.

The OECD defines cryptocurrencies as "assets that can be held and transferred in a decentralized manner, without the intervention of traditional financial intermediaries, including stablecoins, derivatives issued in the form of a crypto-asset and certain non-fungible tokens" and hence, the framework could be used for assets following this structure.

"The CARF will target any digital representation of value that relies on a cryptographically-secured distributed ledger or a similar technology to validate and secure transactions," OECD said. "Carve-outs are foreseen for assets that cannot be used for payment or investment purposes and for assets already fully covered by the CRS. Entities or individuals that provide services effectuating exchange transactions in crypto-assets for, or on behalf of customers would be obliged to report under the CARF."

The OECD noted that there has been a significant surge in crypto-related activities following the boom in the adoption of said assets in 2021.

Unlike traditional finance mediums, cryptocurrencies can be sold or held without notifying centralized authorities and banks, which makes them easy to be used for money laundering, terrorist financing and other such activities.

Therefore, the CARF contains model rules that can be introduced by countries as well as commentary that can be considered by administrations for implementation.

"Today's presentation of the new crypto-asset reporting framework and amendments to the Common Reporting Standard will ensure that the tax transparency architecture remains up-to-date and effective," Mathias Cormann, OECD secretary-general, said.