Written by: ChandlerZ, Foresight News
Recently, Hong Kong SAR announced through the government gazette that authorities are consulting on revisions related to the implementation of the Organization for Economic Co-operation and Development (OECD) Crypto-Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS).
It is noted that since 2018, Hong Kong has been automatically exchanging financial account information with partner tax jurisdictions annually according to the OECD’s Common Reporting Standard, enabling relevant tax authorities to use this data for tax assessment, investigation, and crackdown on tax evasion. The future goal is to automatically exchange taxable information on crypto-asset transactions with relevant partner jurisdictions starting in 2028, and to implement the revised CRS rules from 2029.
In addition, from January 1, 2026, the first batch of the UK and over 40 other countries will implement new crypto-asset tax regulation rules, requiring local crypto service providers to begin collecting user crypto wallet and transaction data in preparation for subsequent cross-border tax information exchange.
For example, in the UK, crypto exchanges operating within the country must start collecting detailed transaction records and complete information of all UK customers. HMRC will cross-check the collected data against users’ tax returns to ensure tax compliance; violators will face sanctions. Industry insiders point out that this data may be used in the future for identity verification, anti-money laundering, and criminal investigations, which could have a profound impact on the anonymity and compliance environment of the crypto industry.
“Is crypto trading now subject to taxation?” Market discussions are widespread. If Hong Kong reports, will mainland China also report? Will there be future tax payments on crypto trading?
What is the CARF Global Taxation Framework?
The Crypto-Asset Reporting Framework (CARF) is an international standard for crypto-asset tax transparency developed by the OECD under the authorization of the G20. Its core purpose is to bring crypto-asset transactions—previously difficult for tax authorities to penetrate and highly cross-border in nature—into a standardized data collection and automatic exchange network among tax authorities. In 2022, the OECD approved and published the rules and annotations for CARF, clarifying that its design goal is to collect taxpayer-related information uniformly and to automatically exchange it annually with the tax residence jurisdiction of the taxpayer, thereby reducing the risks of cross-border crypto-asset tax evasion and underreporting.
In the context of CARF, crypto-assets are not limited to narrowly defined Bitcoin or Ethereum; any digital value transfer that can be held and transferred in a decentralized manner without traditional financial intermediaries is within scope. Its coverage is deliberately made to resemble the real market landscape, including stablecoins, derivatives issued in crypto-asset form, and some NFTs, which may also trigger similar tax risks.
Corresponding to the scope, CARF’s reporting obligations focus on market intermediaries providing key services related to trading and exchanges. The OECD’s approach is to anchor compliance on the entity most capable of understanding transaction value and counterparty information. Entities or individuals that facilitate or execute crypto-asset exchange transactions for clients—such as exchanges between crypto and fiat currencies or swaps between different crypto-assets—are generally considered crypto-asset service providers and are responsible for data collection, due diligence, and reporting obligations.
What is the relationship between CARF and the previously discussed CRS?
Understanding CARF requires placing it within the larger global tax information exchange system. The recent wave of tax reporting in Hong Kong and the US was driven by the CRS mechanism.
Over the past decade, cross-border tax transparency has mainly relied on the CRS standard. Countries require banks, brokerages, funds, and other financial institutions to identify non-resident account holders, and to report key information such as account balances, interest, dividends, and disposal gains annually to their domestic tax authorities, which then automatically exchange this information with the counterpart countries.
Since September 2018, China has fully implemented CRS, exchanging resident financial account information with over 100 countries and regions. After data submission, tax authorities issue notices based on CRS data, asking users to clarify their situation and pay any owed taxes.
While CRS operates relatively maturely within the traditional financial system, most crypto-asset trading, exchange, and transfer activities occur outside bank account systems, especially within independent value transfer networks formed by centralized exchanges, custody wallets, and on-chain transfers. This makes CRS alone insufficient for equivalent penetration. CARF complements this by covering the on-chain and crypto-asset market structures that CRS cannot easily reach.
Alongside the launch of CARF, the OECD has also conducted a systematic revision of CRS. This includes incorporating certain electronic money products and central bank digital currencies (CBDCs) into CRS’s scope, and adjusting the scope for indirect crypto-asset investments via derivatives or investment vehicles to prevent market circumvention of information reporting and exchange through product structuring. Overall, CARF is responsible for transactions and service providers in the native crypto-asset markets, while the revised CRS continues to cover potential risk exposures within the financial account system. Together, they form a more complete picture of automatic cross-border exchange.
The OECD states that, after the technical transmission formats and supporting guidelines are improved, the first batch of cross-border automatic exchanges is expected to start in 2027. Prior to that, multiple jurisdictions will implement domestic data collection and reporting requirements to prepare the data foundation for future cross-border exchanges.
At the EU level, DAC8 was adopted by member states in October 2023 and published in the official gazette. Its design is based on the OECD’s CARF international standard, aiming to include crypto-asset user information in the automatic exchange among member tax authorities.
Will mainland China join?
As of early December 2025, 76 countries/regions worldwide have committed to adopting CARF. The UK and the EU will be the first to implement this framework (data collection starting in 2026, first exchange in 2027); Singapore, the UAE, and Hong Kong SAR follow, planning to collect data in 2027 and fully implement in 2028; Switzerland plans to delay implementation until 2027 and is still cautiously assessing exchange counterparts; the US IRS’s proposal to join CARF is still under internal review.
This means China is not among the first batch for exchange, and CARF data will not be automatically exchanged with Chinese tax authorities through the CARF mechanism.
China has already accumulated mature systems and management experience under the CRS automatic exchange framework, demonstrating that it has the infrastructure to meet international standards in legal design, due diligence, data exchange governance, and information security.
The issue is that CARF’s compliance anchor mainly targets regulated crypto-asset service providers. Since mainland China has long adopted strict regulation or outright bans on virtual currency-related activities, there is no domestically licensed trading platform system that can be routinely integrated into CARF.
Hong Kong’s promotion of CARF may increase the intensity of client tax residence identification and information reporting by crypto service providers in Hong Kong, but this does not automatically mean that the relevant information will flow back to mainland China’s tax authorities. Whether cross-border exchange occurs still depends on whether mainland China chooses to participate and establish exchange relationships with relevant jurisdictions, as well as arrangements on data use restrictions, privacy protection, and technical integration.
It is also important to emphasize that not being part of the system does not mean ignoring the issue. Even without automatic exchange via CARF, cross-border tax information can still flow through existing tax treaties and international cooperation frameworks via case requests, joint enforcement, or other collaborations. As major jurisdictions worldwide begin systematically collecting crypto transaction and transfer data, the clues available to tax authorities will be more comprehensive, and cross-border risk identification capabilities will be enhanced.
For individuals and institutions, the most tangible change is that as long as main operations rely on centralized exchanges, custody services, or fiat gateways, transaction traces and traceability will become increasingly robust, and compliance exposure will shift from probabilistic events to routine.
