48 countries, including the UK and EU, will automatically report transactions starting in 2026.
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CARF requires cryptocurrency exchanges and platforms to verify users' tax residency information and report balances and transaction history annually to their respective tax authorities. These authorities can then share this information across borders under existing tax information exchange agreements.
Lucy Frew, Global Head of Regulatory and Risk Advisory at international law firm Walkers, called CARF "a game-changer that fundamentally reshapes the regulatory compliance landscape for digital asset businesses and their users." She explained that with enhanced onboarding procedures and increased account reviews, the use of overseas platforms will no longer be a blind spot for tax authorities.
Cryptocurrency exchanges are also facing structural changes. They must integrate CARF requirements into their existing Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures and establish self-certification of tax residency collection and reporting systems. Platforms operating in multiple countries will also need to restructure their internal governance and compliance systems.
Asher Tan, CEO of UK-licensed exchange CoinJar, said the phased implementation will require users to provide additional tax residency information. He said striking a balance between maintaining regulatory compliance and maintaining user experience could be a competitive advantage.
For individual users, CARF represents a strengthening of tax enforcement rather than a new tax. From 2026, UK tax authorities will be able to directly access standardized data from exchanges, including overseas platforms, making it easier to identify discrepancies with reported data.
A UK-based cryptocurrency tax expert said offshore transactions, repeat small transactions, DeFi, and missing non-fungible token (NFT) transactions are key risk factors, and advised problematic users to resolve their issues when voluntary disclosure is possible.
With the implementation of CARF, cryptocurrency transactions are expected to be subject to the same level of international tax scrutiny as traditional financial assets.
Reporter Jeong Ha-yeon yomwork8824@blockstreet.co.kr
