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OECD Proposals on Crypto Asset Reporting Framework and Common Reporting Standard

April 19, 2022, 7:00 AM

Crypto assets present challenges for countries relating to tax, money laundering, adapting civil, commercial, corporate, consumer protection and personal data legislation, among other issues.

Effects of Crypto Assets for Global Tax Transparency

In recent years, individuals have rapidly adopted the use of crypto assets for a range of investment and financial activities. However, unlike traditional financial products, crypto assets can be transferred and held without the intervention of established financial intermediaries and without any central administrator having full visibility on either the transactions carried out or crypto asset holdings. Therefore, crypto assets can be exploited to undermine existing international tax transparency initiatives, such as the common reporting standard (CRS).

For this reason, it is important that countries have access to information on crypto asset operations.

Many jurisdictions have already established reporting regimes for this type of transaction, requiring virtual asset service providers (VASPs) to report transactions to both the agencies in charge of combating money laundering and the financing of terrorism, as well as tax administrations.

The great limitation for states is that they only have the power to demand that subjects residing in their jurisdiction, whether exchanges or VASPs, report operations involving crypto assets; they do not have the power to regulate the information regimes obliging nonresidents to report such operations.

In short, states do not currently have information on operations carried out through exchanges located abroad, since such exchanges are not obliged to share information with central banks, tax authorities or other public bodies.

OECD Public Consultation Document

For this reason, on March 22, 2022, the Organization for Economic Cooperation and Development (OECD) published a public consultation document on a new global framework for fiscal transparency to allow the presentation of reports and the exchange of information regarding crypto assets, and the proposed amendments to the CRS for the automatic exchange of information on financial accounts between countries. The CRS has been operating since 2017 and has since increased year on year the number of participating countries, accounts affected, and amounts disclosed.

The CRS requires jurisdictions to obtain information about their financial institutions and to automatically exchange this information annually with other countries. It defines the type of financial information that must be exchanged, the financial institutions that are called upon to transmit this information, the different types of accounts, and the taxpayers involved, as well as the reasonable common due diligence procedures that financial institutions must follow.

Since its implementation, the results of the CRS have been successful, enabling the detection and taxation of offshore operations.

The purpose of the consultation published on March 22 is to inform decisions by policymakers on the possible adoption of a crypto asset reporting framework (CARF) and its related design components.

The collection and exchange of tax relevant information between tax administrations is anticipated, with respect to persons who carry out certain transactions in crypto assets.

The OECD invites interested parties to submit their comments no later than April 29, 2022 by email in Word format to A public consultation meeting will be held at the end of May 2022.

Based on the input received through this public consultation, the OECD plans to finalize the rules and commentary of the CARF and the amended CRS. It will also develop the necessary exchange tools and technical solutions to support reporting and exchanges under CARF and the amended CRS.

The OECD intends to report on CARF and the modified CRS under Indonesia’s G-20 presidency for its October 2022 meeting.

Rules and Commentary of the Crypto-Asset Reporting Framework

According to the consultation document, the rules and commentary of the CARF have been designed around four key building blocks:

  • the scope of crypto assets to be covered;
  • the intermediaries subject to data collection and reporting requirements;
  • the transactions subject to reporting, as well as the information to be reported in respect of such transactions; and
  • the due diligence procedures to identify crypto asset users and the relevant tax jurisdictions for reporting purposes.

The proposed definition of crypto assets targets those 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.

The proposed definition of crypto assets is meant to ensure that all assets covered under the new tax reporting framework also fall within the scope of the Financial Action Task Force Recommendations, ensuring intermediaries’ due diligence requirements can build on existing anti-money laundering/know your customer obligations.

The following four types of relevant transactions are reportable under the CARF:

  • exchanges between crypto assets and fiat currencies;
  • exchanges between one or more forms of crypto assets;
  • reportable retail payment transactions; and
  • transfers of crypto assets.

Individuals and entities that as a company provide services to exchange crypto assets for other crypto assets, or for fiat currencies, must apply due diligence procedures to identify their clients.

Together with the CARF, the OECD has also developed proposals as part of the first comprehensive review of the CRS, with the aim of further improving the functioning of the CRS based on the experience gained by governments and companies since its adoption.

The proposal expands the scope of the CRS to cover electronic money products and central bank digital currencies.

In light of the development of the CARF, the proposals also include changes to cover indirect investments in crypto assets through investment entities and derivatives. At the same time, the proposal contains new provisions to ensure efficient interaction between the CRS and CARF, in particular to limit duplicate reporting.

This is the first of three blocks of the CARF, since the other two that will be developed later are: a framework of bilateral or multilateral competent authority agreements or arrangements for the automatic exchange of information collected under the CARF with jurisdiction(s) of residence of the crypto asset users, based on relevant tax treaties, tax information exchange agreements, or the Convention on Mutual Administrative Assistance in Tax Matters: and technical solutions to support the exchange of information.

Final Thoughts

It is right that the OECD’s work to modernize the tax transparency instruments available to tax administrations includes operations involving crypto assets within the CRS information regime.

Without this work, we will continue to see a proliferation of information regimes in different countries, creating complexity for parties that carry out cross-border operations.

In the face of global developments, the path of cooperation, collaboration, and multilateralism between states is more appropriate than taking unilateral measures, both from the aspect of legislating to regulate and promote the development and digital transformation of countries, and with regard to the fight against tax fraud, money laundering, terrorism and other crimes.

Today, more than ever, we must continue to advance in cooperation and multilateralism at the international level.

Collaboration between the public and private sectors is also imperative to monitor the virtual assets sector and new business models, given their technological dynamism.

Finally, it is important that each country has a clear orientation and an applicable legislative framework, where guidance is provided on how cryptocurrencies fit into the existing fiscal framework, that is, a guide that is comprehensive and addresses the main taxable events and forms of income associated with crypto assets.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Alfredo Collosa is a consultant and tutor in tax administration at the Inter-American Center of Tax Administrations, as well as a professor, investigator, lecturer, and author of books and publications. He holds an Official Masters in Public Finance and Tax Administration (UNED-IEF).

The author may be contacted at: