Original Author: ChandlerZ, Foresight News
Recently, the Hong Kong Special Administrative Region announced through the Government Gazette that the authorities are consulting on proposed revisions related to the implementation of the Organisation for Economic Co-operation and Development's (OECD) Crypto-Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS).
It is noted that since 2018, Hong Kong has been automatically exchanging financial account information with its partner tax jurisdictions annually in accordance with the Common Reporting Standard (CRS) established by the OECD, enabling the relevant tax authorities to use this information for tax assessments, as well as for detecting and combating tax evasion. The future goal is to automatically exchange information on tax-related cryptocurrency transactions with relevant partner tax jurisdictions starting from 2028, and to implement the revised new version of the CRS rules from 2029.
In addition, starting from January 1, 2026, the first batch of countries, including the United Kingdom and more than 40 others, will implement new tax regulatory rules for crypto assets. These rules, effective from January 1, require local crypto service providers to begin collecting user crypto wallet and transaction data in preparation for subsequent cross-border tax information exchange.
Taking the United Kingdom as an example, cryptocurrency exchanges operating in the UK must begin collecting detailed transaction records and full information from all UK customers. HMRC will use the collected data to cross-check users' tax returns to ensure tax compliance, and violators will face penalties. Industry insiders have pointed out that the data could also be used in the future for identity verification, anti-money laundering efforts, and criminal investigations, which will have a profound impact on the anonymity and compliance environment of the cryptocurrency industry.
"Will trading cryptocurrencies be taxed for real?" The market has started to see widespread discussions. If Hong Kong reports transactions, will mainland China also report them? Will cryptocurrency trading in the future also require back taxes?
What is the CARF Global Taxation Framework?
The Crypto-Asset Reporting Framework (CARF) is a set of international standards for tax information transparency regarding crypto assets, developed by the Organisation for Economic Co-operation and Development (OECD) under the authorization of the G20. Its core objective is to incorporate crypto asset transactions—previously difficult for tax authorities to trace and highly prone to cross-border movement—into a standardized information network that can be systematically collected and automatically exchanged among tax authorities. In 2022, the OECD adopted and published the rules and commentaries of CARF, clearly defining its design goal: to collect relevant taxpayer information in a uniform format and automatically exchange it annually with the jurisdictions where taxpayers are tax residents, thereby reducing the risks of cross-border tax evasion and underreporting related to crypto assets.
In the context of CARF, cryptographic assets are not narrowly equivalent to Bitcoin or Ethereum. Any digital value carriers that can be held and transferred in a decentralized manner, without the need for traditional financial intermediaries, fall within the scope. The scope is deliberately designed to closely reflect the actual market situation, including stablecoins, derivatives issued in the form of cryptographic assets, and even some NFTs that may give rise to similar tax risks are also included in the observation range.
Corresponding to the scope of covered entities, the reporting obligations under CARF focus on market intermediaries that provide key services related to transactions and conversions. The OECD approach aims to anchor compliance at the point where entities are best positioned to obtain information on transaction values and counterparties. In principle, any entity or individual that commercially facilitates or executes conversions of relevant crypto-assets for clients (including conversions between crypto-assets and fiat currencies, as well as between different crypto-assets) may be deemed a reporting crypto-asset service provider and thus be subject to obligations regarding data collection, due diligence, and reporting.
What is the relationship between CARF and the previously widely-discussed CRS?
Understanding CARF cannot be separated from placing it within the broader global tax information exchange system for comparison. The previous widespread discussions about the tax supplementation trend in Hong Kong and U.S. stocks occurred under the Common Reporting Standard (CRS) framework.
Over the past decade, cross-border tax transparency has mainly relied on the Common Reporting Standard (CRS). Countries require financial institutions such as banks, brokers, and fund managers to identify account holders who are not tax residents of that country, and to report key information such as account balances, interest, dividends, and capital gains annually to their local tax authorities. The tax authorities then automatically exchange this information with the relevant countries.
Since September 2018, China has fully implemented the Common Reporting Standard (CRS), exchanging financial account information of residents with more than 100 countries and regions. After data reporting, tax authorities issue notifications based on CRS data, requiring users to explain their situations and pay any outstanding taxes.
CRS has operated relatively maturely within the traditional financial system. However, a significant portion of cryptocurrency asset transactions, conversions, and transfers occur outside the banking account system. In particular, a separate value circulation network has formed among centralized trading platforms, custodial wallets, and on-chain transfers, making it difficult for CRS alone to achieve the same level of penetration. CARF complements CRS by addressing the on-chain and cryptocurrency market structures that were previously difficult for CRS to cover.
While introducing the CARF, the OECD also initiated the first systematic revision of the CRS. On one hand, it incorporated certain electronic money products and new financial instruments such as central bank digital currencies (CBDCs) into the scope of the CRS. On the other hand, it adjusted the definitions to address investment paths involving derivatives or investment vehicles for indirect investment in crypto assets, in order to prevent market participants from circumventing information reporting and exchange through product structures. Overall, the CARF addresses the transaction and service provider dimensions of the native crypto asset market, while the revised CRS continues to cover the potential risk exposures within the financial account system. Together, they form a more comprehensive picture of the automatic exchange framework.
The OECD noted that after the technical transmission formats and supporting guidelines for CARF and the revised CRS are finalized, the first round of automatic cross-border information exchange is expected to begin in 2027. Before that, multiple jurisdictions will first implement domestic data collection and reporting requirements, preparing a data foundation for subsequent cross-border exchanges.
At the EU level, DAC8 was adopted by member states in October 2023 and published in the Official Journal in the same month. Its framework is based on the OECD's Common Reporting Standard (CRS) for financial accounts (CARF), aiming to include information on users of crypto-assets into the automatic exchange of information among tax authorities of member states.
Will mainland China also join?
As of early December 2025, 76 countries and regions worldwide have committed to adopting the Common Anti-Abuse Rule (CARF). The United Kingdom and the European Union will be the first to implement this framework (data collection to begin in 2026, with the first exchange in 2027); Singapore, the United Arab Emirates, and Hong Kong, China will follow, planning to collect data in 2027 and fully implement the framework in 2028. Switzerland has postponed its implementation to 2027 and is still carefully evaluating potential exchange partners. The U.S. IRS's proposal to join CARF remains under internal review.
This means that China is not on the initial exchange list, and CARF data will not be automatically exchanged with Chinese tax authorities through the CARF mechanism.
China has already accumulated mature systems and tax administration experience under the automatic exchange mechanism of the Common Reporting Standard (CRS), indicating that it has the necessary infrastructure to meet international standards in terms of legal design, due diligence procedures, data exchange governance, and information security.
The issue is that CARF's compliance anchor primarily rests on regulated crypto-asset service providers. However, Mainland China has long adopted a strong regulatory approach, and even a prohibitive stance, toward virtual currency-related businesses. As a result, there is no licensed trading platform system domestically that can be routinely incorporated into CARF.
Hong Kong's advancement of the Common Reporting Standard (CRS) may enhance the efforts of cryptocurrency service providers in Hong Kong to identify customers' tax residency and report relevant information. However, this does not automatically mean that such information will naturally flow back to mainland tax authorities. Whether cross-border information exchange occurs still depends on whether the mainland chooses to participate and establishes an exchange relationship with relevant jurisdictions, as well as the arrangements between the two sides regarding data usage restrictions, privacy protection, and technical integration.
However, it is equally important to emphasize that not being included does not mean it can be ignored. Even without the automatic exchange pathway of the Common Reporting Standard (CRS), cross-border tax information may still be shared on a case-by-case basis, through joint enforcement actions, or other forms of cooperation under existing tax treaties and international tax administration frameworks. As major global jurisdictions begin systematically collecting data on cryptocurrency transactions and transfers, tax authorities will have more complete information, and their ability to identify cross-border risks will also improve accordingly.
For individuals and institutions, the most realistic change is that as long as the primary operational pathways rely on centralized trading platforms, custodial services, or fiat on-ramps and off-ramps, transaction data will become increasingly traceable and transparent. Compliance exposure will shift from a probabilistic event to a regular norm.