New Moves Toward Crypto Tax Standardization in the U.S.

As cryptocurrencies continue their global expansion, the realm of regulation is striving to catch up. Despite Bitcoin enduring a rocky phase, notable efforts are underway. The Trump administration might engage with the Common Reporting Standard for Automatic Exchange of Financial Account Information (CARF), potentially revolutionizing crypto tax reporting practices in the United States.

What is CARF?

In the face of increasing losses faced by investors, the clarity of the tax landscape remains inadequate. If there is an uptick in the market, the IRS aims to be ready to manage the situation. Consequently, the Trump administration is reportedly considering regulations that would allow the IRS access to foreign cryptocurrency account details, streamlining international tax reporting.

The U.S. Treasury Department’s new proposals concerning international crypto tax collaborations have reportedly been presented to Trump’s team for consideration. By the start of 2025, the proposal aims to analyze how the U.S. can effectively participate in CARF, a system designed to curb tax evasion via the exchange of cryptocurrency-related information across borders.

Why are these regulations important?

Launched by the Organization for Economic Cooperation and Development in 2022, CARF’s principal goal is to combat tax evasion by enhancing information-sharing regarding crypto assets globally. Following robust market expansions in 2021, this agreement has gained significant traction.

Several countries including Japan, France, and the United Kingdom have already embraced the CARF framework, paving the path for a more standardized and universally accepted approach to cryptocurrencies. However, for individual investors, standardized taxation introduces new complexities due to varied norms globally.

“CARF facilitates the automatic exchange of tax information regarding crypto assets. It addresses the rapid growth of the crypto asset market and ensures recent gains in global tax transparency are not eroded.” – OECD

The following key conclusions can be drawn:

• The regulatory proposals for crypto tax reporting are reaching advanced levels of discussion under the Trump administration.
• The U.S. aims for an early 2025 milestone to assess its role in CARF participation.
• Countries taking part in CARF are moving towards a more regulated cryptocurrency environment.

While the White House urges ongoing consideration of CARF by the Treasury and IRS, the exclusion of decentralized finance (DeFi) transactions from new mandates remains a topic of debate. Looking forward to 2027, the Trump administration seems inclined to support these measures, which could pave the way for more precise crypto taxation within the U.S.