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The OECD crypto framework is an amendment to the Common Reporting Standard, and covers stablecoins, crypto derivatives, and NFTs.
The Organization for Economic Co-operation and Development (OECD) has released its new global tax reporting framework for crypto assets. This official blueprint has a scope that encompasses stablecoins, crypto derivatives, as well as certain non-fungible tokens (NFTs). In addition, it will also reportedly crackdown on international tax evasion using crypto.
According to a press statement, the OECD framework, known as the Crypto-Asset Reporting Framework (CARF), will be formally unveiled this week. It will happen at a G20 meeting of finance ministers and central bank governors slated to take place from October 12-13th. Per the report, these finance stakeholders will converge on Washington DC as part of the latest OECD Secretary-General Tax Report.
OECD Framework Meant to Ease Communication of Crypto-related Taxpayer Information Among Jurisdictions
The OECD crypto framework was approved in August and was meant to formalize information sharing between its 38 member nations. It will strive to accomplish this by automatically sharing crypto-related taxpayer information between these jurisdictions. Speaking on the development, OECD Secretary General Mathias Cormann explained that the CARF is a variation of the Common Reporting Standard, which has proven effective against international tax evasion. However, the current scope of assets under the Common Reporting Standard does not properly address crypto space requirements. This includes not providing tax administrations with adequate visibility on when taxpayers take on tax-specific transactions in, or possess, relevant crypto assets. According to him:
“The Common Reporting Standard has been very successful in the fight against international tax evasion. In 2021, over 100 jurisdictions exchanged information on 111 million financial accounts, covering total assets of EUR 11 trillion. Today’s presentation of the new crypto-asset reporting framework and amendments to the Common Reporting Standard will ensure that the tax transparency architecture remains up-to-date and effective.”
The OECD report on its crypto tax framework also includes detailed guidelines on how the intergovernmental organization designates crypto assets. Furthermore, it explains the methods the OECD would use to deal with violations. This includes targeting “any digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.”
According to the OECD, intermediaries and other service providers facilitating exchanges between crypto assets are under the CARF scope. These include exchanges, brokers, and ATM operators.
CARF In Line With Global Anti-Money Laundering Standards
Nearly 2 years in the making, the CARF came about due to the crypto industry’s exponential growth. Last year, the digital assets space almost crested at a staggering $3 trillion in market capitalization, from $715 billion at the beginning of 2021. However, this was before the general downturn of crypto assets since the turn of this year.
Also, the OECD’s framework conforms to the Financial Action Task Force’s global anti-money laundering standards. According to the report, the intergovernmental body is also working on an implementation package to ensure the widespread application of the CARF.