White House Mulls IRS Crypto Reporting Framework, Aiming for Global Alignment

White House Reviewing IRS Proposal for Global Crypto Reporting Framework

The White House is undertaking a thorough review of the Internal Revenue Service’s (IRS) proposal to join the global Crypto-Asset Reporting Framework (CARF). This framework aims to provide the IRS with access to data on Americans' crypto accounts held in foreign jurisdictions.

The proposed adoption of the “Broker Digital Transaction Reporting” rule, submitted to the White House last Friday, seeks to align the U.S. crypto tax system with 72 other nations committed to implementing CARF by 2028. While the IRS did not classify the proposal as “economically significant,” it would mandate more rigorous reporting of capital gains taxes from foreign crypto platforms by American taxpayers.

Potential Impact of CARF on U.S. Taxpayers

A White House crypto policy recommendations report issued in late July suggested that implementing CARF would disincentivize American taxpayers from transferring their digital assets to offshore exchanges, thereby leveling the playing field for U.S.-based crypto platforms. Over a third of the world's countries have already signed up for CARF.

CARF is scheduled for rollout in 2027, with 50 countries, including Brazil, Indonesia, Italy, Spain, Mexico, and the UK, set to participate. An additional 23 countries, including the U.S., have indicated their commitment to implementing CARF by 2028.

CARF's Objectives and Combating Tax Evasion

The Organization for Economic Cooperation and Development (OECD) established CARF in late 2022 to facilitate the exchange of cryptocurrency data among member nations, with the goal of combating international tax evasion. Cryptocurrencies pose a unique challenge to tax authorities, as users can transfer assets across borders instantaneously, store funds in self-custody wallets outside the traditional banking system, and conduct transactions pseudonymously.

Tighter U.S. Crypto Tax Regulations Looming in 2026

The U.S. is preparing to introduce 1099-DA forms in January 2026, which will require U.S.-based crypto exchanges to report more comprehensive transaction data, encompassing both incoming and outgoing transfers.

The End of Crypto Anonymity?

Clinton Donnelly, a U.S.-based crypto tax lawyer, suggested that the implementation of the 1099-DA form would mark the beginning of the end of anonymity in the crypto space, in a recent post on X.

“Right now, the IRS doesn’t have instant visibility into everything you’re doing on the blockchain. However, that’s about to change,” Donnelly stated, adding: “A few years down the road, with better tools and data integration, they’ll be able to scan blockchain networks at scale to identify major non-reporters, and target them for audits.”