Crypto Anonymity's End as IRS Joins Global Tax Framework

The White House is advancing a proposal to grant the Internal Revenue Service (IRS) access to U.S. taxpayers' cryptocurrency transactions conducted on offshore platforms, aiming to align with global tax standards and curb international tax evasion. The rule, submitted to the Office of Information and Regulatory Affairs last week, seeks to implement the Crypto-Asset Reporting Framework (CARF), an international standard developed by the Organization for Economic Cooperation and Development (OECD) to automate cross-border crypto tax reporting. The White House previously endorsed CARF in a summer 2025 report, stating it would prevent U.S. taxpayers from shifting assets to offshore exchanges and level the playing field for domestic crypto platforms.

CARF, set for global implementation in 2027, has already secured commitments from 72 countries, including major economies like Japan, Germany, and the United Kingdom, as well as crypto-friendly jurisdictions such as Singapore and the United Arab Emirates. By joining the framework, the U.S. would gain access to transaction data from foreign exchanges, enabling the IRS to track capital gains and enforce compliance. The White House report emphasized that CARF would not impose new reporting obligations on decentralized finance (DeFi) transactions, a key concession to crypto industry stakeholders.

CARF is expected to have a significant impact on the global crypto ecosystem by reducing tax evasion and increasing transparency.

The framework aims to reduce the complexity of tracking global crypto flows by establishing standardized reporting protocols that are compatible with major blockchain networks. This shift marks a pivotal moment in the evolution of crypto regulation and tax enforcement.

Domestically, the IRS is also preparing for stricter oversight. Starting in January 2026, U.S. crypto exchanges will be required to issue 1099-DA forms, reporting detailed transaction data to the IRS, including both incoming and outgoing transfers. This move, coupled with CARF adoption, signals a broader effort to eliminate anonymity in crypto transactions. Clinton Donnelly, a U.S.-based crypto tax attorney, described the measures as "the beginning of the end of crypto anonymity," noting the IRS's growing visibility into blockchain activity.

The proposal faces scrutiny amid leadership instability at the IRS. President Donald Trump recently withdrew the nomination of Donald Korb, a seasoned tax attorney, for the role of IRS chief counsel, exacerbating concerns about the agency's capacity to manage complex regulatory shifts. However, the Treasury Department remains tasked with finalizing CARF-related rules before the 2027 deadline.

The regulatory environment's evolution has already had a noticeable effect on the price of major cryptocurrencies, with Bitcoin and Ethereum experiencing volatility as markets react to policy developments. Analysts suggest that regulatory clarity could eventually stabilize prices, but in the short term, uncertainty remains high. As more nations align with CARF, the market impact is likely to grow, especially for platforms operating in unregulated spaces.

Critics argue that expanded IRS access could raise privacy concerns, particularly for users of self-custody wallets outside traditional banking systems. Yet, proponents contend the measures are essential to prevent tax evasion in a sector where assets can be transferred instantaneously across borders. With global adoption of CARF accelerating, the U.S. is under pressure to finalize its approach, balancing regulatory rigor with innovation in the crypto ecosystem.