New Crypto Tax Era Begins Jan 1 as CARF Reporting Takes Hold

Starting January 1, 2026, cryptocurrency users across 48 jurisdictions will face a new era of tax transparency. The Organization for Economic Co-operation and Development’s Crypto-Asset Reporting Framework, known as CARF, will begin collecting standardized data from exchanges and platforms in the United Kingdom, European Union, and other early-adopting regions.

The OECD’s Crypto-Asset Reporting Framework (CARF) will officially take effect on January 1, 2026. The UK, the EU, and 48 other jurisdictions will require crypto platforms to collect and report users’ tax residency, account balances, and transaction data, which will be shared…

— Wu Blockchain (@WuBlockchain) December 30, 2025

The framework mandates in-scope providers to gather detailed customer information and verify tax residency. Exchanges must report users’ balances and transactions annually to domestic tax authorities. These authorities will then share data across borders through existing information-exchange agreements.

Lucy Frew, partner and head of the global Regulatory & Risk Advisory Group at law firm Walkers, described CARF as a “game-changer.” She stated the framework is “set to reshape compliance for digital asset businesses and customers.”

In practice, users will encounter tougher onboarding questions and more frequent account reviews. The assumption that activity on overseas or offshore platforms remains invisible to tax agencies will no longer hold true.

Exchanges Face Structural Overhaul

For cryptocurrency exchanges, CARF represents far more than a cosmetic compliance update. Firms must integrate the new requirements with existing Know Your Customer and Anti-Money Laundering processes.

Platforms will need to redesign onboarding flows to capture tax-residency and self-certification data. Building or upgrading reporting systems becomes essential for compliance.

New governance frameworks will emerge alongside mandatory staff training programs. Closer coordination between compliance, engineering, and support teams becomes critical, especially for platforms operating across multiple jurisdictions.

Frew warned that companies taking early action will be best positioned to manage risk and maintain trust. Those delaying implementation may “face regulatory and reputational consequences.”

Asher Tan, CEO and co-founder of UK-licensed exchange CoinJar, confirmed users will be asked to provide additional tax residency information. He noted the challenge lies in implementing requirements that “meet regulatory expectations while preserving the clarity, trust, and user-friendly experience people expect.”

For regulated platforms, Tan suggested this balance can become a “competitive advantage” as crypto “moves further into the mainstream financial system.”

Hong Kong Joins Global Tax Transparency Push

Meanwhile, Hong Kong launched a public consultation on December 9, 2025, targeting amendments to the Inland Revenue Ordinance. The initiative aims to implement CARF within the coming year.

Hong Kong plans to begin automatic exchange of crypto tax information with partner jurisdictions in 2028. Amended Common Reporting Standard requirements will follow by 2029.

The Hong Kong government has launched a public consultation on revisions to the Crypto Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS). The goal is to automatically exchange tax information related to crypto asset transactions with appropriate partner tax…

— Wu Blockchain (@WuBlockchain) December 9, 2025

The city has participated in automatic financial account information exchanges since 2018 under the CRS framework. This system enables tax authorities worldwide to detect and combat tax evasion through shared data.

The rapid growth of digital asset markets prompted the OECD to publish CARF in 2023. The framework specifically addresses crypto-asset transactions and introduces new requirements for digital financial products.

Secretary for Financial Services and the Treasury Christopher Hui emphasized the move’s strategic importance. He stated it demonstrates Hong Kong’s commitment to international tax cooperation and combating cross-border tax evasion.

The OECD launched its second peer review of Hong Kong’s CRS administrative framework in 2024. The review examines the effectiveness of the city’s implementation and enforcement mechanisms.

In response to OECD recommendations, Hong Kong proposes mandatory registration for financial institutions. The government also plans to raise penalty levels and strengthen enforcement to maintain favorable international ratings.

Following Hong Kong’s timeline, legislative amendments are expected within the coming year. The consultation period allows industry participants and the public to submit views on implementation details.

The global push toward crypto tax transparency marks a significant shift for the industry. Users trading digital assets will now operate under increasingly interconnected international reporting standards.