The Organization for Economic Co-operation and Development (OECD) released Crypto-Asset Reporting Framework (CARF) on October 11 designed to help tax authorities achieve greater visibility on crypto transactions and the users behind them.
The framework, which was approved in August, ensures "the collection and automatic exchange of information on transactions for relevant crypto". It covers exchanges, brokers, and ATM operators that facilitate exchanges between relevant crypto assets.
The framework's due diligence process requires both individual and entity customers and controlling persons to identify themselves.
CARF sets reporting requirements for crypto asset firms in the countries in which they operate. Crypto exchanges between fiat currencies and relevant crypto assets, as well as crypto transfers (including retail payments) will be required to be reported.
The framework comes against the backdrop of the crypto industry's capitalisation plummeting from $715 billion to nearly $3 trillion this year after rising in January.
Furthermore, it comes in the wake of recent developments in the Financial Action Task Force's global anti-money laundering standards.
At an OECD meeting in May, the crypto industry had pushed back on tax reporting measures for cryptocurrencies.
Investment vehicles and derivatives that indirectly invest in crypto assets are covered by the Common Reporting Standard (current standards). Digital currencies issued by central banks were also included in the CRS rather than the CARF. The CRS specifies the financial account information to be exchanged and reported, as well as the due diligence procedures to be followed.
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