The Organization for Economic Co-operation and Development (OECD), an intergovernmental organization with 38 countries, established to promote economic progress and world trade, has launched its new tax information framework, the Crypto Asset Information Framework (CARF), to the G20 countries. .

The launch was based on a request from G20 countries for the intergovernmental organization to develop a framework that provides cross-country reporting and information sharing on crypto assets.

G2O finance ministers and central bank governors will meet on October 12-13 to discuss their views on the new regulatory framework, the OECD revealed.

The CARF framework is based on certain enhancements to the Common Reporting Standard (CRS) that address fiscal transparency concerns in the digital economy.

The new transparency initiative, developed together with the G20 countries, comes amid the rapid adoption of the use of cryptocurrencies for a wide range of investments and financial uses.

Unlike traditional financial products, cryptocurrencies can be transferred and held without the intervention of traditional financial intermediaries like banks and regulators like central banks. The cryptocurrency market has also given rise to new intermediaries and service providers, such as cryptocurrency exchanges and wallet providers, many of which are currently unregulated.

Such developments mean that cryptocurrencies and related transactions are not comprehensively covered by the OECD/G20 Common Reporting Standard (CRS). This therefore increases the likelihood of its use for tax evasion while undermining the progress made in tax transparency through the adoption of the CRS.

The CARF framework therefore seeks to ensure transparency in crypto transactions by automatically exchanging such information with local regulators about taxpayers on an annual basis. CARF aims to achieve this goal by targeting entities that offer cryptocurrency exchange transaction services on behalf of clients to be required to report under CARF. Most crypto assets such as NFTs, DeFi, cold wallets, wallet addresses, and intermediaries such as crypto exchanges and DeFi providers are now fully covered by the reporting standard, unlike in the past.

The CARF framework consists of three basic elements: standards that can be transposed into national legislation, guidelines to assist local administrators with the implementation of information sharing, and technical solutions to support such information sharing.

The CARF proposal comes at an uncertain time for the cryptocurrency market, as recent fluctuations in the values ​​of Bitcoin and other assets have affected several cryptocurrency companies and left them with budget constraints.

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