‍Introduction

According to the official website of the U.S. government, the Internal Revenue Service (IRS) submitted a proposal to the White House in November, suggesting the adoption of a set of international standards for digital asset reporting and taxation; currently, the White House is still reviewing this proposal. This proposal, titled "Broker Reporting for Digital Asset Transactions," was submitted to the White House on November 14, and its core content is the implementation of the "Crypto-Asset Reporting Framework" (referred to as CARF). Once it takes effect, the IRS will be able to obtain the crypto transaction information of U.S. taxpayers on overseas exchanges and offshore platforms.

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This move takes place against the backdrop of the Trump administration returning to lead the White House, which makes it particularly thought-provoking. Although the market once held expectations for the new administration to loosen regulation, fiscal reality and deficit pressure seem to have made the federal government choose a tougher route of pragmatism in tax enforcement. This proposal is not only a patch for U.S. domestic tax laws, but also a crucial piece in the global puzzle of crypto-asset tax regulation.

As one of the CARF research series, this article will start from this proposal and first provide a brief review of the institutional background and core mechanisms of the CARF framework; then, combined with current U.S. tax information reporting and cross-border information exchange systems, it will analyze its institutional connection and potential change directions in the digital asset field; finally, from the perspective of different types of market entities, it will evaluate the compliance impact and risk exposure that the landing of CARF may bring, and propose corresponding response ideas, with a view to providing reference and inspiration for Web3 Participants and investors.

1 The White House reviews new rules, locking in global crypto tax sources

The core intention of the proposal currently being reviewed by the White House is to introduce an international information disclosure mechanism with stronger cross-border enforceability on top of existing domestic digital asset reporting rules, thereby breaking through geographic boundaries in obtaining tax information and pushing relevant service providers to undertake stricter and more comprehensive data reporting obligations. This means the U.S. regulatory perspective no longer stays only on the data availability of local trading platforms, but follows the global tax transparency trend represented by CARF, extending the information feelers to overseas exchanges and offshore service networks, with the goal of forming a regulatory closed loop that is identifiable, traceable, and exchangeable for the overseas crypto activities of U.S. tax residents.

This proposal is both an institutional response to international collaborative governance and is deeply driven by direct macro fiscal pressure. On the one hand, against the background of major global economies accelerating the promotion of CARF cross-border reporting standards, the U.S. will face a institutional gap in cross-border information acquisition and enforcement collaboration if it does not establish a docking mechanism; on the other hand, under the Trump administration's economic policy with tax cuts and tariffs as dual engines, federal finance faces severe challenges. According to calculations by the Congressional Budget Office (CBO), the U.S. deficit in the 2025 fiscal year alone could exceed $2 trillion. Under the premise of not increasing traditional income tax rates, the domestic policy goal of "Closing the Tax Gap" continues to strengthen, and digital assets, especially offshore accounts and cross-platform transactions, are regarded as important sources of tax loss and compliance blind spots. As the U.S. Department of the Treasury pointed out multiple times in its "Greenbook": "Offshore crypto accounts lead to tens of billions of dollars in tax loss every year."

2 CARF opens the global crypto tax "CRS 2.0" era

The "Crypto-Asset Reporting Framework" (CARF) is a global crypto-asset tax information transparency standard formulated by the Organization for Economic Cooperation and Development (OECD). This framework, through unified due diligence rules and an automatic exchange of tax information mechanism, requires Reporting Crypto-Asset Service Providers (RCASPs) to report key information such as customer identity, accounts, and transactions to tax authorities, and includes transfers to external wallets within the reporting scope to make up for the gap in traditional financial regulation regarding the cross-border flow of digital assets.

CARF itself is an international standard formulated by the OECD and does not have direct legal effect; it must be truly implemented through the commitments of various countries to join, legislative transformation, and system docking. In other words, the time when CARF starts to be implemented in different countries/regions depends on the specific commitments of each country. OECD data shows that as of December 4, 2025, 75 jurisdictions have officially committed to implementing CARF in 2027 or 2028, of which 53 jurisdictions have signed the CARF Multilateral Competent Authority Agreement (CARF MCAA). This White House review proposal may systematically provide the U.S. path for the first time.

3 The U.S. crypto regulatory framework: gradually becoming orderly and clear

Although CARF has built a channel for cross-border data exchange at the international level, whether it can truly play a role still depends on whether the tax authorities of various countries possess sufficient domestic legal authorization and compliance foundations to fully utilize overseas data. For the U.S., this means that the institutional design of reporting obligation subjects, information calibers, and enforcement powers must first be completed domestically. Looking back at 2021–2025, the U.S. governance of crypto-assets has presented characteristics of being gradually orderly and clear.

3.1 Phase One: The foreshadowing of the Infrastructure Act (2021-2023)

The starting point is usually traced back to the 2021 Infrastructure Investment and Jobs Act (IIJA) transformation of tax reporting rules. That act expanded the definition of "Broker" under tax law, including anyone "responsible for regularly providing services involving the transfer of digital assets" into it, even pulling DeFi developers into tax reporting obligors. But in the following two years, the Treasury Department, through a series of notices of proposed rulemaking, gradually clarified the regulatory boundary by distinguishing between pure technology providers and customer-oriented intermediary services based on elements such as "whether they provide transaction execution/matching/transfer services for customers, and whether they can obtain and verify customer information."

3.2 Phase Two: The landing of Form 1099-DA (2024-2025)

After the completion of authorization at the legislative level, the IRS promoted Form 1099-DA as a standardized carrier for digital asset transaction reports and anchored the application starting point to relevant transactions occurring after 2025-01-01. This move aims to raise the reporting process of digital asset transactions to the same standardized level as traditional securities transactions. Specifically, U.S. domestic exchanges (such as Coinbase, Kraken) must now mandatorily generate Form 1099-DA for every user, listing in detail the cost basis, acquisition date, sale date, and capital gains of each transaction; at the same time, this measure created huge historical data cleaning pressure on the industry, forcing exchanges to complete large-scale user KYC updates and historical data corrections between 2024 and 2025. For accounts unable to provide complete tax information, exchanges took measures such as freezing or implementing mandatory withholding tax to ensure the tightness of the domestic tax compliance network.

3.3 Phase Three: Global regulation and offshore compliance (2025 to present)

Since the Foreign Account Tax Compliance Act (FATCA) was passed and implemented in 2010, the U.S. has been able to obtain overseas financial account information of U.S. tax residents through the global financial institution reporting system; but for quite a long time, crypto-asset trading platforms—especially overseas exchanges and offshore service providers—were not fully incorporated into this set of cross-border information disclosure networks. When the domestic digital asset tax reporting system (represented by rules such as 1099-DA) gradually entered the implementation stage and crypto-asset financialization compliance channels (such as spot ETFs) opened, the structural gap in the regulatory vision pointed more and more concentratedly toward the offshore market: if transaction information from overseas platforms cannot be obtained systematically, tax collection and management will be difficult to form a closed loop, which also constitutes the realistic background for the recent White House review of relevant proposals.

In 2024, the Treasury/IRS finally released and promoted the final rules for digital asset broker information reporting (the 1099-DA system), laying the foundation for domestic data collection; subsequently in 2025, relevant departments submitted the proposed rules for docking with OECD CARF to the White House for review, showing that the U.S. has begun to explore incorporating the cross-border information exchange mechanism into the digital asset tax collection and management toolbox.

3.4 The completion of the regulatory puzzle: From strict enforcement to a combination of blocking and unblocking

It is worth mentioning that after the tax collection and management system has gradually completed its promotion, simply using "tightening of tax regulation" is not enough to summarize the overall face of U.S. crypto governance. A more accurate observation is: U.S. regulation is gradually transitioning from an early highly fragmented model dominated by case-by-case enforcement to a combined governance model. On the one hand, it opens institutionalized channels for compliant financialization and institutional participation, and on the other hand, it continues to raise the cost of violations and tax base transparency through reporting, enforcement, and information mechanisms. This structure of "simultaneous unblocking and blocking" is the key to understanding the divergence of policy signals since 2024.

After the FTX incident, SEC Chairman Gary Gensler's "regulation by enforcement" strategy reached its peak in 2023, launching successive lawsuits against Coinbase, Binance, etc., and the industry was walking on thin ice.

However, in 2024, the pattern saw a phased change. In this year, the Securities and Exchange Commission successively approved spot Bitcoin ETFs (January) and spot Ethereum ETFs (May), a move that officially accepted crypto-assets as a "legal" asset class and opened the door for compliant entry of traditional capital; at the same time, Congress also took active legislative action, the "Financial Innovation and Technology for the 21st Century Act" (FIT21) was passed by a bipartisan majority in the House of Representatives (May), attempting for the first time to establish a clear regulatory framework and clearly demarcating the jurisdiction of the SEC and CFTC. In addition, subsequent regulatory calibers saw adjustments in 2025 (SAB 122), easing the accounting treatment resistance for banks to enter crypto custody and other businesses to a certain extent.

Based on the interpretation and sorting of the above policy events, the U.S. regulatory pattern is shifting from an enforcement model dominated solely by the Securities and Exchange Commission (SEC) to a collaborative system composed of the Congressional legislative framework, prudent regulation by the SEC and CFTC, and anti-money laundering and tax compliance managed by the Department of the Treasury and the Internal Revenue Service (IRS). This change reflects a more mature regulatory idea of simultaneous unblocking and blocking: on the one hand, providing development channels for assets that meet norms (such as ETFs), and on the other hand, strengthening control over violations such as tax evasion (such as crypto-assets targeted by CARF). The SEC's trend toward flexibility is actually to keep innovation activities in the U.S., while the IRS's increased regulatory intensity is to ensure that the wealth generated from this can be included in the U.S. tax base.

4 Industry impact and future outlook: Finding a new balance in the era of transparency

Global regulatory clarity and tax compliance are the general trend, and the U.S. continuously strengthening offshore enforcement will have a profound impact on all participants in the crypto-asset industry: the "ostrich mentality" has already failed, and a brand-new era of compliance has arrived.

4.1 For virtual currency trading platforms / broker-type service providers

In the U.S. context, the core handle of platform compliance is the domestic level "digital asset broker reporting" system (represented by Form 1099-DA). For platforms facing U.S. customers or having reporting obligation connection points in the U.S., they need to conduct customer identity information collection, transaction information aggregation, and report generation in accordance with broker reporting rules, and complete supporting customer tax information (such as TIN, etc.) and cost basis related data governance (some elements have transitional arrangements). If the subsequent U.S. agenda for docking with CARF continues to advance, then for platforms with a high proportion of cross-border business, the focus of compliance will further align reporting content with cross-border standards and may trigger stricter data standardization, reconciliation record-keeping, and cross-border reporting capability building. Overall, this will significantly raise the data governance and compliance investment of platforms, but it will also enhance their sustainable operating capabilities in institutional clients, banking cooperation, and compliant markets.

4.2 For individual investors

With the landing of domestic broker reporting, more transaction data will enter the IRS information system through mechanisms such as 1099-DA, and the space for individual underreporting is compressed; if the cross-border information exchange mechanism is further strengthened in the future (including the CARF docking path), the information availability of overseas platforms and offshore accounts will increase, and the pressure for explaining historical transactions and capital chains will also rise. For investors, the real risk is often not the increase in future tax burden, but the lack of consistency in past years' declarations and cost basis restoration capabilities, leading to tax supplements, interest penalties, and compliance disputes.

4.3 For crypto-asset custody institutions

The obligation boundary of custody institutions depends on whether they only provide pure custody services or simultaneously provide broker-type services such as transaction execution, matching, and exchange. If they only provide storage, wallet management, custody reports, and other services, their compliance pressure is more reflected in customer due diligence, asset isolation, security control, and cooperation requirements with banks; but if custody is deeply combined with transaction execution, they are more likely to be incorporated into the broker reporting and relevant tax information reporting framework, requiring the establishment of more complete customer tax information collection, transaction caliber aggregation, and report output capabilities. In trend, U.S. institutional evolution will force custody institutions to more clearly segment business lines and role positioning, reducing the gray area of being called custody but actually being matching.

4.4 For banks and traditional financial intermediaries

Although tax reporting obligations mainly fall on broker-type platforms and service providers, banks and traditional financial intermediaries will also be passively incorporated into this ecosystem. When banks provide fiat currency on-and-off ramps, settlement, custody, or credit services for crypto platforms, they will pay more attention to the platform's customer due diligence, transaction traceability, tax information compliance, and sanctions/anti-money laundering risk exposure, and may take being auditable, being able to provide compliance reports, and being able to cooperate with tax/regulatory investigations as a prerequisite for cooperation. For business such as wealth management and family offices, crypto-assets will also be more systematically incorporated into overall tax compliance and cross-border reporting planning, prompting institutional clients to shift from post-investment remediation to pre-transaction compliance design.

5 Response strategies: From wait-and-see to proactive compliance

FinTax Commentary: Given that the U.S. docking with OECD CARF is still in the review chain, and the specific application scope and technical caliber are not yet fully clear, a more feasible path for market entities is: use the domestic broker reporting system (1099-DA, etc.) as a benchmark, and refer to the common practices of FATCA/CRS and other jurisdictions promoting CARF, complete data governance and process transformation in advance, and reserve interfaces for possible future cross-border docking.

Specifically, for trading platforms and broker-type service providers, they should evaluate as soon as possible whether they fall into the scope of broker/reporting obligation subjects, and prioritize aligning with the customer information collection and transaction data aggregation requirements of 1099-DA; in the KYC process, supplement key fields such as TIN and tax resident identity, establish auditable data record-keeping and report output capabilities, and reserve mapping interfaces compatible with international data structures to reduce the transformation costs of subsequent rule landing.

For individual investors, the key is not the trading platform, but whether transaction records and cost basis can be restored and explained, and are consistent with the declaration caliber. It is recommended to aggregate cross-platform/cross-chain transaction flows as early as possible and keep vouchers for costs, expenses, and considerations; for investors with overseas platform transactions or offshore accounts, evaluate the consistency of declarations in previous years and potential supplementary reporting needs in advance to avoid passive response after information availability is enhanced.

For custody institutions and infrastructure service providers, obligations should be divided according to the essence of the business: pure custody takes security, isolation, and auditable records as the core; if custody is coupled with broker services such as matching/execution/exchange, they need to refer to platform standards to improve customer tax due diligence and data reporting capabilities. Even if the details are not fixed, transaction data retention, reconciliation, and reporting capabilities should be made into a state ready for inspection.

Conclusion

The White House's evaluation of the proposal this time is by no means an isolated executive order, but a re-assertion of national sovereignty over financial borders in the digital economy era. For practitioners, this is both a challenge and a huge opportunity. Traditional tax avoidance thinking will no longer be feasible, replaced by refined tax planning and automated compliance reporting. In this new era, transparent compliance has become an inevitability. As Benjamin Franklin said: "In this world, nothing is certain except death and taxes." And in the world of Web3, this sentence should perhaps be added a footnote: "Even on the decentralized blockchain, taxes will eventually follow like a shadow."