End of Crypto Anonymity as US Joins Global Tax Framework

The White House has begun a detailed review of a Treasury Department proposal that would align the United States with the global Crypto-Asset Reporting Framework (CARF), a move poised to grant the IRS access to Americans' foreign cryptocurrency transactions and curb offshore tax evasion. The proposed rules, submitted to the Office of Information and Regulatory Affairs on November 14, reflect the Trump administration's broader strategy to harmonize U.S. crypto tax policies with international standards.

CARF, developed by the Organization for Economic Cooperation and Development (OECD) in 2022, is a multinational agreement that mandates automatic information sharing between member countries to combat tax evasion in digital assets. Over 70 jurisdictions, including all G7 nations except the U.S. and crypto hubs like Singapore, the UAE, and the Bahamas, have already committed to implementing CARF by 2027. The framework would require foreign exchanges and custodial platforms to report U.S. customers' crypto holdings to the IRS, mirroring the existing Foreign Account Tax Compliance Act (FATCA) for traditional financial accounts.

The Trump administration's push for CARF is outlined in a July report from the President's Working Group on Digital Asset Markets, which emphasized that joining the framework would "discourage U.S. taxpayers from moving their digital assets to offshore exchanges" while ensuring U.S. platforms remain competitive globally according to the report. The report also clarified that new reporting requirements should not apply to decentralized finance (DeFi) transactions, a nod to the administration's cautious approach toward preserving innovation in the crypto space.

Domestically, the IRS is already ramping up oversight of crypto activity. Starting in 2026, centralized exchanges will be required to report transactions via Form 1099-DA, a mandate aimed at increasing tax compliance. Only about 25% of U.S. crypto investors currently meet their tax obligations, according to an IRS review. The agency's efforts to bolster compliance are further underscored by its recent legal challenges, including a leadership crisis highlighted by the withdrawal of IRS nominee Donald Korb, who faced criticism for perceived Democratic leanings according to reports.

For U.S. taxpayers, the CARF implementation could signal an end to the era of crypto anonymity. By 2027, Americans holding assets on foreign exchanges may see their transactions subjected to the same scrutiny as traditional financial accounts, significantly reducing opportunities for tax evasion. However, privacy advocates and parts of the crypto industry have raised concerns about the framework's potential to infringe on user privacy and create regulatory friction.

The proposed rules now await final approval from White House advisors, with implementation expected to follow global timelines in 2027. If enacted, the move would mark a pivotal shift in how the U.S. regulates digital assets, aligning it with a growing coalition of nations determined to close offshore loopholes in the crypto economy.