The Crypto-Asset Reporting Framework (CARF) responds to a G20 request that the OECD develop a framework for the automatic exchange of information between countries on cryptoassets. 

The framework will ensure transparency with respect to cryptoasset transactions, through automatically exchanging such information with the jurisdictions of residence of taxpayers on an annual basis, in a standardised manner similar to the Common Reporting Standards (CRS).

The CARF consists of rules and commentary which set out: 

i) the scope of cryptoassets to be covered; 

ii) the entities and individuals subject to data collection and reporting requirements; 

iii) the transactions subject to reporting, as well as the information to be reported in respect of such transactions; and 

iv) the due diligence procedures to identify cryptoasset users and controlling persons, and to determine the relevant tax jurisdictions for reporting and exchange purposes.

The OECD has also put forward to the G20 a set of further amendments to the CRS, with the purpose of modernising its scope to comprehensively cover digital financial products and to improve its operation, taking into account the experience gained by countries and business. 

The CARF will be presented to G20 Finance Ministers and Central Bank Governors for discussion at their next meeting on 12-13 October in Washington D.C, as part of the latest OECD Secretary-General’s Tax Report.

The first report deals with the tax treatment of virtual currencies analyses the approaches and policy gaps across the main tax types (income, consumption and property taxes) in more than 50 jurisdictions.

It also analyses the tax policy implications of various emerging issues related to the taxation of virtual currencies, including stablecoins and central bank digital currencies, and the evolution of the consensus mechanisms that maintain blockchain networks and the emergence of decentralised finance.

Finally, the report offers some key insights policymakers should consider to strengthen their legal and regulatory frameworks for taxing virtual currencies. Some of these considerations include:

• "Providing clear guidance and legislative frameworks for the tax treatment of crypto-assets and virtual currencies, including to ensure consistency with the treatment of other assets.
• "Supporting improved compliance, including through the consideration of simplified rules on valuation and on exemption thresholds for small trades.
• "Aligning the tax treatment of virtual currencies with other policy objectives or trends, including the decline of cash use and environmental policy objectives.
• "Designing appropriate guidance on the tax treatment of emerging technological areas, including stablecoins, central bank digital currencies, proof-of-stake and decentralised finance, for which existing frameworks may not be appropriate."

In the second report, by Secretary General Angel Gurría to the G20 Finance Ministers, the OECD said that it was progressing with work to "design a tax reporting framework that will ensure tax transparency with respect to cryptoassets, including the income derived from the sale of such assets".

The OECD added that it aims to present " a comprehensive implementation package" to the G20 next year.

This report:

• examines the benefits of asset tokenisation and the challenges to its wider adoption;
• analyses the potential disruptive effect on trading, liquidity, pricing, clearing and settlement;
• highlights the increased importance of a trusted and credible central authority in a tokenised environment (such as a custodian);
• sheds light to the possible necessity for a tokenised form of central bank digital currency or stablecoin for the payment leg of security settlement on DLT-based trading venues; and
• discusses the policy implications of tokenisation for financial markets