Although China is not on the initial list of data exchanges, global tax transparency is inevitably extending to crypto assets.
Article author and source: ChandlerZ, Foresight News
Recently, Hong Kong announced through a government gazette that the authorities are consulting on the implementation of the OECD's Crypto-Asset Reporting Framework (CARF) and related revisions to the Common Reporting Standard (CRS).
The document states that since 2018, Hong Kong has been automatically exchanging financial account information annually with partner tax jurisdictions in accordance with the OECD's Common Reporting Standards. This allows relevant tax authorities to use this information for tax assessments, as well as to detect and combat tax evasion. The future goal is to automatically exchange tax-related information on crypto-asset transactions with relevant partner tax jurisdictions from 2028, and to implement the revised CRS rules from 2029.
Furthermore, starting from January 1, 2026, the UK and more than 40 other countries will implement new tax regulations for crypto assets, requiring local crypto service providers to begin collecting users' crypto wallet and transaction data in preparation for subsequent cross-border tax information exchange.
In the UK, for example, crypto exchage operating in the UK are required to begin collecting detailed transaction records and complete information from all their UK clients. HMRC will use the collected data to cross-check users' tax returns to ensure tax compliance, and violators will face sanctions. Industry insiders point out that this data could be used for identity verification, anti-money laundering, and criminal investigations in the future, profoundly impacting the anonymity and compliance environment of the cryptocurrency industry.
"Is cryptocurrency trading now subject to taxation?" This has sparked widespread discussion in the market. If Hong Kong is also required to report, will mainland China follow suit? Will cryptocurrency trading be subject to additional taxes in the future?
What is the CARF Global Taxation Framework?
The Crypto Asset Reporting Framework (CARF) is an international standard for the transparency of tax information related to crypto assets, developed by the OECD under the mandate of the G20. Its core purpose is to bring crypto asset transactions, which were previously difficult for tax authorities to penetrate and were easily transferred across borders, into a standardized information network that can be collected and automatically exchanged between tax authorities. In 2022, the OECD adopted and published the CARF rules and commentary, clarifying its design goal as collecting tax-related information with a unified standard and automatically exchanging it annually with the taxpayer's tax residency jurisdiction, thereby reducing the risk of cross-border crypto asset tax evasion and underreporting.
In the context of CARF, crypto assets are not synonymous with Bitcoin or Ethereum in the narrow sense. They encompass any digital value carrier that can be held and transferred in a decentralized manner without the intervention of traditional financial intermediaries. Its coverage is deliberately made to be closer to the real market form, including stablecoins, derivatives issued in the form of crypto assets, and also including some NFTs in the scope of observation that may cause similar tax risks.
Corresponding to the covered entities, CARF's reporting obligations revolve around market intermediaries that provide key services for transactions and exchanges. The OECD's approach is to anchor compliance at the link with the best conditions to grasp the value of transactions and counterparty information. In principle, any entity or individual that commercially facilitates or executes relevant crypto asset exchange transactions for clients (including exchanges between crypto assets and fiat currencies, as well as swaps between crypto assets) may be identified as a reporting crypto asset service provider and bear the obligations of data collection, due diligence, and reporting.
What is the relationship between CARF and the previously hotly debated CRS?
Understanding CARF requires placing it within the broader global tax information exchange system for comparison. The previously widely discussed wave of back taxes on Hong Kong and US stocks occurred under the Common Reporting Standard (CRS) mechanism.
Over the past decade, cross-border tax transparency has primarily relied on the CRS standard. Countries require banks, securities firms, funds, and other financial institutions to identify account holders who are not tax residents of their country and to report key information such as account balances, interest, dividends, and disposal gains to their tax authorities annually. This information is then automatically exchanged between the tax authorities and the other country.
China fully implemented the CRS (Common Reporting Standard) in September 2018, exchanging resident financial account information with more than 100 countries and regions. After data submission, tax authorities issue notices based on CRS and other data, requiring users to explain their situation and pay any outstanding taxes.
While CRS operates relatively maturely within the traditional financial system, the trading, exchange, and transfer of crypto assets largely occur outside the banking account system. In particular, independent value circulation networks have formed between centralized trading platforms, custodial wallets, and on-chain transfers, making it difficult for CRS alone to achieve equivalent penetration. CARF, on the other hand, fills the gaps in the on-chain and crypto asset market structure that CRS previously struggled to cover.
Alongside the launch of CARF, the OECD conducted its first round of systematic revisions to the CRS. On one hand, it brought certain electronic money products and new financial products such as central bank digital currencies (CBDCs) into the CRS's scope. On the other hand, it adjusted the definition of indirect investment in crypto assets through derivatives or investment vehicles to prevent the market from circumventing information reporting and exchange through product structures. Overall, CARF covers the transaction and service provider dimensions of the native crypto asset market, while the revised CRS continues to cover the relevant risk exposures that may be borne within the financial account system. Together, they form a more complete automatic exchange mechanism.
The OECD points out that after the technical transmission format and supporting guidelines of CARF and the revised CRS are improved, the first cross-border automatic exchange is expected to start in 2027. Before that, several jurisdictions will first implement domestic data collection and reporting requirements to prepare the data foundation for subsequent cross-border exchange.
At the EU level, DAC8 was adopted by member states in October 2023 and published in the Official Journal in the same month. Its system design is based on the OECD's CARF international standard and aims to include the automatic exchange of information on crypto asset users between member state tax authorities.
Will mainland China join as well?
As of early December 2025, 76 countries/regions worldwide had committed to adopting CARF. The UK and the EU will be the first to implement this framework (starting data collection in 2026 and the first exchange in 2027); Singapore, the UAE, and Hong Kong will follow, planning to collect data in 2027 and fully implement it in 2028; Switzerland has postponed its implementation to 2027 and is still carefully evaluating its exchange partners; the US IRS's proposal to join CARF is still under internal review.
This means that China is not on the first batch of exchange lists, and CARF data will not be automatically exchanged with Chinese tax authorities through the CARF mechanism.
China has accumulated mature systems and tax administration experience under the CRS automatic data exchange system, demonstrating that it has the infrastructure to meet international standards in areas such as legal design, due diligence criteria, data exchange governance, and information security.
The problem is that CARF's compliance anchor mainly lies in regulated crypto asset service providers, while mainland China has long adopted a strong regulatory or even prohibitive approach to virtual currency-related businesses, and there is no domestic system of licensed trading platforms that can be routinely incorporated into CARF.
Hong Kong's implementation of CARF may increase the strength of encrypted service providers in Hong Kong in identifying customers' tax residency and reporting information. However, this does not automatically mean that relevant information will flow back to the mainland tax authorities. Whether cross-border exchange occurs still depends on whether the mainland chooses to participate and establish exchangeable relationships with the relevant jurisdictions, as well as the arrangements between the two places regarding restrictions on data use, privacy protection, and technological integration.
However, it is equally important to emphasize that not yet being a member does not mean it can be ignored. Even without the automatic exchange pathway of CARF, cross-border tax information can still flow within existing tax treaties and international administrative cooperation frameworks, through case-by-case requests, joint enforcement, or other cooperative means. As major jurisdictions worldwide begin systematically collecting data on crypto asset transactions and transfers, tax authorities will have more complete leads, and their ability to identify cross-border risks will improve accordingly.
For individuals and institutions, the most tangible change is that as long as their main operational paths rely on centralized trading platforms, custody services, or fiat currency gateways, transaction data traceability and auditability will become increasingly robust, and compliance exposure will shift from a probabilistic event to a regular occurrence.
