The IRS has submitted an international standard proposal for digital asset reporting and taxation to the White House, which will enable access to encrypted transaction information of taxpayers on overseas exchanges. This article will analyze the institutional background of the CARF framework, the evolution of the US current tax system, and the compliance implications for various market participants. The article is based on an article by TaxDAO, organized, translated, and written by Foresight News.
(Background briefing: Why does the US embrace crypto? The answer may lie in the $37 trillion debt)
(Additional background: The most revenue-collecting US president in history—how the Trump family turned political influence into their own treasury)

Table of Contents

• Introduction
• 1 White House reviews new regulations, targeting global crypto tax sources
• 2 CARF ushers in the “CRS 2.0” era of global crypto taxation
• 3 US crypto regulatory framework: gradually becoming orderly and clear
  • 3.1 First phase: the foreshadowing of infrastructure bills (2021-2023)
  • 3.2 Second phase: implementation of Form 1099-DA (2024-2025)
  • 3.3 Third phase: global regulation and offshore compliance (2025 to present)
  • 3.4 Maturing regulatory puzzle: from strict enforcement to combined regulation and oversight
• 4 Industry impact and future outlook: seeking new balance in an era of transparency
  • 4.1 For virtual currency trading platforms / broker services
  • 4.2 For individual investors
  • 4.3 For crypto asset custody institutions
  • 4.4 For banks and traditional financial intermediaries
• 5 Response strategies: shifting from observation to proactive compliance
• Conclusion

Introduction

According to the US government’s official website, the IRS (IRS) submitted a proposal to the White House in November, recommending the adoption of an international standard for digital asset reporting and taxation. The White House is currently reviewing this proposal. Titled “Broker Digital Transaction Reporting,” it was submitted on November 14 and centers on implementing the “Crypto-Asset Reporting Framework” (Crypto-Asset Reporting Framework, abbreviated as CARF). Once enacted, the IRS will be able to access information on Americans’ crypto transactions on overseas exchanges and platforms abroad.

This move is particularly intriguing against the backdrop of the Trump administration regaining control of the White House. Although the market once expected a relaxation of regulations under the new administration, fiscal realities and debt pressures seem to have led the federal government to adopt a more pragmatic and stringent approach to tax enforcement. This proposal is not only a patch to domestic tax law but also a key piece in the global puzzle of crypto asset taxation regulation.

As part of the CARF series of studies, this article will start from this proposal, briefly review the institutional background and core mechanisms of the CARF framework; then, combining the current US tax reporting and cross-border information exchange systems, analyze its institutional integration and potential changes in the digital asset domain; finally, from the perspectives of different market entities, evaluate the compliance impacts and risks that CARF implementation may bring, and propose corresponding strategies, aiming to provide reference and insights for industry participants and investors.

1 White House reviews new regulations, targeting global crypto tax sources

The core intent of the White House’s review of this proposal is to introduce a more cross-border enforceable international information disclosure mechanism based on existing domestic digital asset reporting rules, thereby breaking through regional boundaries in tax information acquisition and pushing service providers to undertake stricter, more comprehensive data reporting obligations. This means that US regulators’ focus is no longer limited to data from domestic trading platforms but aligns with the global trend of tax transparency represented by CARF, extending information reach to offshore exchanges and offshore service networks, aiming to establish a traceable, exchangeable regulatory loop for offshore crypto activities of US taxpayers.

This proposal is both a response to international cooperative governance and a direct driver driven by macro fiscal pressures. On one hand, in the context of major economies accelerating the adoption of CARF cross-border reporting standards, the US risks a regulatory gap if it does not establish a matching mechanism in cross-border information collection and enforcement cooperation; on the other hand, under Trump’s economic policies driven by tax cuts and tariffs, the federal budget faces severe challenges. According to the Congressional Budget Office (CBO), the US deficit could surpass $2 trillion in fiscal year 2025 alone. Without increasing traditional income tax rates, the policy goal of “closing the tax gap” (Closing the Tax Gap) continues to strengthen, with offshore accounts and cross-platform transactions in digital assets seen as significant sources of tax revenue loss and compliance blind spots. As the US Treasury has repeatedly pointed out in its “Green Book”: “Offshore crypto accounts lead to hundreds of billions of dollars in annual tax revenue loss.”

2 CARF ushers in the “CRS 2.0” era of global crypto taxation

The “Crypto Asset Reporting Framework” (CARF) is a global standard for crypto asset tax information transparency developed by the Organisation for Economic Co-operation and Development (OECD). It mandates crypto asset service providers (RCASPs) to report key client information such as identity, accounts, and transactions to tax authorities through unified due diligence rules and automatic information exchange mechanisms, including transfers to external wallets, to fill the gaps left by traditional financial regulation in cross-border digital asset flows.

CARF itself is an international standard formulated by OECD and does not have direct legal effect. Its implementation depends on countries’ commitments to join, legislative translation, and system integration. In other words, the timing of CARF’s implementation in different countries/regions depends on their specific commitments. OECD data shows that as of December 4, 2025, 75 jurisdictions have officially committed to implementing CARF in 2027 or 2028, with 53 jurisdictions having signed bilateral or multilateral agreements among authorities (CARF MCAA). The White House’s review proposal may be the first systematic outline of the US pathway.

3 US crypto regulatory framework: gradually becoming orderly and clear

Although CARF has established cross-border data exchange channels at the international level, its effectiveness still depends on whether domestic tax authorities have sufficient legal authorization and compliance foundations to fully utilize offshore data. For the US, this means completing the design of reporting subjects, information scope, and enforcement authority within the country. Reviewing the period from 2021 to 2025, the US has shown a trend toward a more orderly and clear crypto governance system.

3.1 First phase: the foreshadowing of infrastructure bills (2021-2023)

The starting point is often traced back to the 2021 “Infrastructure Investment and Jobs Act” (IIJA), which reformed tax reporting rules. The bill expanded the definition of “broker” (Broker) under tax law to include anyone responsible for providing digital asset transfer services on a regular basis. DeFi developers are included as tax-reporting entities. Over the following two years, the Treasury issued a series of proposed rules focusing on elements such as whether the entity provides trading execution/ matching/ transfer services, and whether it can obtain and verify customer information, gradually distinguishing between purely technical providers and customer-facing intermediary services, clarifying regulatory boundaries.

3.2 Second phase: implementation of Form 1099-DA (2024-2025)

After legislative authorization, the IRS promoted Form 1099-DA as the standardized vehicle for digital asset transaction reporting, with the starting point set for transactions after January 1, 2025. This aims to elevate the reporting process of digital asset transactions to the same standardized level as traditional securities trading. Specifically, US domestic exchanges (e.g., Coinbase, Kraken) are now required to generate 1099-DA forms for each user, detailing cost basis, acquisition date, sale date, and capital gains; this also creates significant historical data cleaning pressure, prompting exchanges to complete large-scale KYC updates and historical data corrections between 2024 and 2025. For accounts unable to provide complete tax information, exchanges may freeze accounts or implement withholding taxes to ensure compliance.

3.3 Third phase: global regulation and offshore compliance (2025 to present)

Since the passage and implementation of the 2010 “Foreign Account Tax Compliance Act” (FATCA), the US has been able to obtain offshore financial account information of US taxpayers through the global financial institution reporting system. However, for a long time, crypto trading platforms—especially offshore exchanges and offshore service providers—were not fully integrated into this cross-border disclosure network. As domestic digital asset tax reporting systems (represented by 1099-DA) gradually come into effect, and crypto financialization compliance channels (such as spot ETFs) open up, the structural gaps in regulation increasingly point to offshore markets: if offshore platform trading data cannot be systematized, tax enforcement will struggle to form a closed loop. This is the practical background of the recent White House review proposals.

In 2024, the Treasury / IRS finally issued and advanced the final rules for digital asset broker reporting (1099-DA system), laying the foundation for domestic data collection; subsequently, in 2025, relevant departments will submit proposed rules aligned with OECD CARF for White House review, indicating that the US is beginning to explore integrating cross-border information exchange mechanisms into its digital asset tax enforcement toolkit.

3.4 Maturing regulatory puzzle: from strict enforcement to combined regulation and oversight

It is worth noting that, after the gradual advancement of the tax enforcement system, simply tightening regulation does not fully capture the overall picture of US crypto governance. A more accurate view is that US regulation is transitioning from an early highly fragmented, case-by-case enforcement model to a hybrid governance approach. On one hand, this opens institutional channels for compliant financialization and institutional participation; on the other hand, it continues to raise the cost of violations and increase tax base transparency through reporting, enforcement, and information mechanisms. This “combination of strict and lenient” structure is key to understanding the policy signals since 2024.

Following the FTX incident, SEC Chair Gary Gensler’s enforcement and regulatory strategies peaked in 2023, with lawsuits against Coinbase, Binance, and others, making the industry cautious.

However, in 2024, a phased change occurred. The US SEC approved spot Bitcoin ETFs (January) and spot Ethereum ETFs (May), officially recognizing crypto assets as a “legitimate” asset class, opening the door for traditional capital to enter compliantly; simultaneously, Congress took active legislative steps, passing the “21st Century Financial Innovation and Technology Act” (FIT21) in the House with bipartisan support (May), attempting to establish a clear regulatory framework and delineate SEC and CFTC jurisdictions. Later, in 2025, regulatory approaches saw adjustments (SAB 122), easing accounting hurdles for banks entering crypto custody and related activities.

From the interpretation of these policy developments, the US regulatory landscape is shifting from a single SEC enforcement model to a collaborative system involving legislative frameworks, SEC and CFTC prudential regulation, and the Treasury and IRS responsible for AML and tax compliance. This transition reflects a more mature, balanced regulatory approach: on one side, providing compliant assets (e.g., ETFs) with development pathways; on the other, strengthening control over violations such as tax evasion (e.g., crypto assets targeted by CARF). The SEC’s increased flexibility aims to retain innovation within the US, while the IRS’s intensified regulation ensures that wealth generated is incorporated into the US tax base.

( 4 Industry impact and future outlook: seeking new balance in an era of transparency

Global regulatory clarity and tax compliance are the inevitable trends. The US’s ongoing crackdown on offshore enforcement will have profound impacts on all participants in the crypto industry: “ostrich mentality” is no longer viable; a new era of compliance has arrived.

)# 4.1 For virtual currency trading platforms / broker services

In the US context, the core compliance mechanism for platforms is the domestic “digital asset broker reporting” system (represented by Form 1099-DA). For platforms serving US customers or with reporting obligations in the US, they need to collect customer identity info, consolidate transaction data, generate reports, and ensure proper tax info ###e.g., TIN### and cost basis data governance (with transitional arrangements for some elements). If the US continues to push forward with CARF integration, platforms with high cross-border business will need to further align reporting content and cross-border capabilities, possibly triggering stricter data standardization, reconciliation, and cross-border reporting infrastructure. Overall, this will significantly increase platforms’ data governance and compliance investments but also enhance their sustainability in institutional clients, banking cooperation, and compliance markets.

(# 4.2 For individual investors

As domestic broker reporting is implemented, more transaction data will flow into IRS systems via mechanisms like 1099-DA, reducing the scope for underreporting; if cross-border information exchange )including CARF( advances further, offshore platform and offshore account info will become more accessible, increasing pressure for historical transaction and fund flow explanations. For investors, the real risk is not future tax burdens but potential penalties, interest, and disputes caused by incomplete past reporting and insufficient cost basis restoration.

)# 4.3 For crypto asset custody institutions

Custody institutions’ obligations depend on whether they only provide custody services or also offer trading execution, matching, and exchange services. If only custody, compliance focuses on customer due diligence, asset segregation, security controls, and banking cooperation; if custody is combined with trading, they may be included in broker reporting and related tax info reporting frameworks, requiring comprehensive customer tax info collection, transaction scope, and report generation capabilities. The trend will push US institutions to clarify business roles and reduce gray areas of “custody” that are actually matching.

4.4 For banks and traditional financial intermediaries

Although tax reporting obligations mainly fall on broker platforms and service providers, banks and traditional intermediaries will also be passively involved. When banks provide fiat on/off ramps, settlement, custody, or credit services to crypto platforms, they will pay more attention to customer due diligence, transaction traceability, tax info compliance, and sanctions/AML risks, possibly making auditability, compliance reporting, and cooperation with tax/regulatory investigations prerequisites. For wealth management and family office services, crypto assets will be more systematically integrated into overall tax compliance and cross-border reporting planning, shifting from post-transaction remediation to pre-transaction compliance design.

( 5 Response strategies: shifting from observation to proactive compliance

Given that the US’s integration with OECD CARF is still under review, with unclear scope and technical details, market entities’ more feasible approach is to base on domestic broker reporting systems )1099-DA### and adopt common practices from FATCA/CRS and other jurisdictions to advance data governance and process transformation, leaving interfaces for future cross-border integration.

Specifically, trading platforms and broker services should early assess whether they fall within broker/reporting subject scope, prioritize aligning customer info collection and transaction data aggregation with 1099-DA requirements; enhance KYC with TIN, tax residency, and other key fields, establish auditable data traces and report output capabilities, and prepare mapping interfaces compatible with international data structures to reduce future rule implementation costs.

For individual investors, the focus is on whether transaction records and cost basis can be restored, explained, and aligned with reporting scope. Early collection of cross-platform / cross-chain transaction logs, preservation of cost, expenses, and transfer evidence is recommended; for those with offshore platform transactions or offshore accounts, early evaluation of past reporting consistency and potential correction needs can prevent passive responses after increased data availability.

For custody institutions and infrastructure providers, obligations should be clearly delineated based on actual business functions: pure custody emphasizes security, segregation, and auditable records; if custody is coupled with matching/execution/exchange, they need to upgrade customer due diligence and data reporting capabilities per platform standards. Even if details are not finalized, data retention, reconciliation, and reporting capabilities should be prepared for future verification.

Conclusion

The White House’s review of this proposal is not an isolated administrative order but a redefinition of national sovereignty over financial boundaries in the digital economy era. For practitioners, this is both a challenge and a huge opportunity. Traditional tax avoidance strategies will no longer suffice; instead, refined tax planning and automated compliance reporting will become essential. In this new era, transparency and compliance are inevitable. As Benjamin Franklin said, “In this world, nothing can be said to be certain except death and taxes.” In the world of Web3, perhaps this should be amended to: “Even on decentralized blockchains, taxes will eventually follow like a shadow.”