U.S. Proposes Crypto Reporting Framework for Foreign Digital Asset Holdings

The U.S. government is pressing for new legislation requiring American taxpayers to report foreign digital asset accounts and pay taxes on related earnings, according to a recent report from the White House [1]. The proposed policy aims to close regulatory gaps and ensure compliance with U.S. tax obligations in the rapidly evolving cryptocurrency sector. The initiative is part of a broader effort to establish a clear and robust regulatory framework for digital assets, emphasizing transparency and accountability for individuals and companies holding crypto accounts abroad [1].

The White House report highlights that the ease of moving digital assets offshore has created opportunities for tax avoidance, which could place U.S. digital asset exchanges at a disadvantage compared to their international counterparts [1]. The administration argues that a lack of a reporting system may discourage the growth of domestic crypto markets, while also enabling U.S. taxpayers to bypass their obligations through offshore platforms [1].

The proposed legislation, known as the Crypto-Asset Reporting Framework (CARF), would obligate taxpayers to disclose their foreign digital asset accounts, including those held on international crypto exchanges [1]. However, the report clarifies that the IRS and Treasury should not impose new reporting requirements on decentralized finance (DeFi) transactions, where users engage in crypto activities without intermediaries or personal identification [1].

In addition to tax reporting, the report includes several recommendations for regulating the broader crypto ecosystem. It calls for banking regulators to establish clearer pathways for crypto-focused banks to engage in traditional banking activities, including access to Federal Reserve services [1]. The White House also urged regulatory agencies to ensure that applications for bank charters or master accounts are approved by default if timelines are not met, absent extraordinary circumstances [1].

On the issue of illicit finance, the report asks the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to assess whether the Bank Secrecy Act should be updated to apply to the crypto industry [1]. Some in the crypto sector argue that the pseudonymous nature of digital assets makes compliance with anti-money laundering laws impractical [1].

The report was endorsed by top officials in the Trump administration, including White House crypto and AI adviser David Sacks, Treasury Secretary Scott Bessent, and SEC Chair Paul Atkins, who described it as a key step toward clarifying U.S. crypto policy [1]. The administration has also taken enforcement actions against major crypto platforms such as Coinbase and Binance, emphasizing the need for legal and tax compliance [2].

The proposed measures align with broader legislative efforts to formalize reporting requirements for foreign financial activities. Taxpayers are already required to file an FBAR if their foreign accounts exceed $10,000 at any point during the year [4]. The new policy could extend similar obligations to digital assets, treating crypto holdings with the same scrutiny as traditional financial instruments [4].

The White House has described the initiative as a “landmark move” toward reinforcing American leadership in the digital economy [5], with the report referring to the November re-election of President Trump as a “hard fork” that has reset U.S. crypto policy for the better [1]. The administration aims to ensure that the U.S. remains a leading and secure environment for digital asset investment and business activity [1].

Sources:

[1] White House Wants Americans to Report, Pay Taxes on Foreign Crypto Accounts (https://decrypt.co/332718/white-house-report-taxes-foreign-crypto-accounts)

[2] White House set to unveil closely watched crypto policy ... (https://ca.news.yahoo.com/white-house-set-unveil-closely-100450836.html)

[3] White House Set to Unveil Closely Watched Crypto Policy ... (https://www.usnews.com/news/top-news/articles/2025-07-30/white-house-set-to-unveil-closely-watched-crypto-policy-report)

[4] What is the minimum income to file taxes - guide 2025 (https://www.taxesforexpats.com/articles/financial-planning/minimum-income-to-file-taxes.html)

[5] The Payments Newsletter including Digital Assets & ... (https://www.jdsupra.com/legalnews/the-payments-newsletter-including-1351633/)