The White House is getting closer to giving the IRS the green light to keep an eye on international crypto transactions.
In a report from July, they suggested that the IRS and Treasury think about creating rules to set a global standard for better tax compliance.
Right now, the White House is looking at a proposed rule that would allow the IRS to access details about digital asset transactions made by U.S. taxpayers in other countries.
This proposal landed with the Office of Information and Regulatory Affairs recently, which is part of the Office of Management and Budget. Their job is to check that federal regulations line up with what the president wants.
This move follows a comprehensive digital asset report released over the summer that tackled various topics, including how crypto should be regulated. The report also suggested that the IRS and Treasury consider drafting rules to create the Crypto-Asset Reporting Framework (CARF). This framework aims to boost tax compliance by requiring digital asset providers to report certain transactions to regulators.
I have read the source of the information and this is the reason why they want to implement the crypto asset reporting framework:
I do not know in what numbers U.S. taxpayers move their cryptocurrencies to foreign exchanges to sell them. I believe they do this to escape paying taxes on them in the U.S. The source does not carry all answers to the questions i have, but the news reads that CARF would require crypto asset providers to report 'specific' tx's, but there is no information on the type of tx's they are talking about.
OECD Crypto Tax Reporting Framework Set to Transform Global Transparency with Historic 2026 Launch
https://www.mexc.com/news/376052
"Understanding the OECD Crypto Tax Reporting Framework (CARF)
The OECD developed CARF specifically to address the tax transparency challenges posed by the borderless nature of crypto-assets. Historically, tax authorities struggled to track cryptocurrency transactions that easily crossed international boundaries. The framework directly targets this regulatory gap. Under CARF, crypto-asset service providers, including exchanges, brokers, and certain wallet providers, must identify their customers tax residencies. Furthermore, these entities must collect and report detailed financial data annually.
The required information includes:
Customer Identification Data: Names, addresses, dates of birth, and Tax Identification Numbers (TINs).
Tax Residency Information: Jurisdictions where the customer is a tax resident.
Financial Activity Data: Gross proceeds from crypto-asset sales and exchanges.
Account Balance Information: Year-end holdings and values of crypto-assets.
This collected data will then flow through existing international information exchange networks, primarily the Common Reporting Standard (CRS) infrastructure. Therefore, a Japanese tax authority could automatically receive reports about a residents trading activity on a French-based exchange. This system creates a global web of financial transparency specifically designed for the digital asset era."
Legally, we know that the IRS (Internal Revenue Service) is one of the tax law enforcers that is collected from federal income, whether it is taken from individuals or from companies, In my opinion, I also think the approach to monitoring crypto transactions internationally is good.
At least if the IRS tax laws were active internationally, it might limit or be able to audit illegal transactions that occur internationally, like what terrorists and other prohibited organizations do, the point is that they should not collect taxes from crypto transactions or related exchanges, if this is done this will be a new negative approach that occurs on exchanges, Crypto wallets that exist or will become a new problem in the crypto environment.
The Foreign Account Tax Compliance Act (FATCA) has been in place for a long time. The UK, France, Germany, Canada, and other countries
FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts.
https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act
We already have:
FATCA, which forces foreign banks and institutions to report U.S. persons accounts or face exclusion from U.S. financial markets.
CARF (Crypto-Asset Reporting Framework), which is the global crypto analogue, automatic exchange of crypto transaction data between tax authorities. The U.S. has NOT formally adopted CARF yet. But U.S. platforms may still collect CARF-style data if operating in CARF countries. Under CARF, platforms are required to collect and report user identity information such as legal name, address, jurisdictions of tax residence, taxpayer identification numbers, and date of birth, along with account details like wallet addresses or platform account identifiers linked to that user. They must also report transaction-level data, including transfers in and out (even when interacting with self-custody wallets), the type of crypto-asset involved, and the date and fiat-value of each transaction, plus counterparty information where available, such as the receiving or sending platform or jurisdiction. That information is then automatically exchanged between participating countries tax authorities.
CRS (Common Reporting Standard): Global bank and financial account data exchange between tax authorities. Most countries participate. The U.S. does not, it uses FATCA instead. The key difference is scope and data type: CRS focuses on custodial financial accounts and financial income, such as account balances, interest, dividends, and proceeds from the sale of financial assets, reported by banks and brokers. It does not require the granular, transaction-by-transaction transfer reporting or wallet address linkage that CARF introduces for crypto. In other words, CRS tracks where money is held and what income it generates, while CARF tracks how crypto moves and between whom.