Trump White House considers framework to let IRS tax foreign American crypto holdings

The Trump administration has moved a step closer to joining an international agreement that would allow the Internal Revenue Service (IRS) to access information and tax Americans’ cryptocurrency holdings in foreign accounts.

Proposed rules from the Treasury Department regarding US participation in the Crypto-Asset Reporting Framework (CARF) were sent to the White House on Friday, November 14, for review by the president’s advisors, according to government records. 

CARF is a global tax transparency initiative designed to combat offshore crypto tax evasion through automatic information sharing between member nations.

In its crypto policy report published this summer, Washington digital-asset policy advisors urged the United States to join dozens of other nations already participating in the agreement, and this latest development is a step in that direction.

International collaboration around tax transparency for crypto

CARF was created by the Organization for Economic Cooperation and Development (OECD) in 2022, with over 53 jurisdictions as signatories to the agreement. 

All G7 members except the United States have already signed on, alongside major cryptocurrency hubs such as the United Arab Emirates, Singapore, and the Bahamas.  

Should the US join CARF, foreign exchanges and custodial platforms would be required to report information about US customers’ crypto holdings to the IRS, functioning similarly to the Foreign Account Tax Compliance Act (FATCA) that governs traditional financial accounts. Global implementation is scheduled to begin in 2027.

“Implementing CARF would discourage US taxpayers from moving their digital assets to offshore digital asset exchanges,” the administration stated in its crypto policy report.

It also added that “implementing CARF would promote the growth and use of digital assets in the United States and alleviate concerns that the lack of a reporting program could disadvantage the United States or US digital asset exchanges.”

Balancing enforcement with innovation

The current administration has been pro-crypto and has also signed into law legislation that brings some form of regulatory clarity to the space; however, it is also working to maintain tax compliance standards across the board, and this includes crypto held offshore. 

In its report, the White House asked that the Treasury Department and the IRS work on rules that will enable the implementation of CARF in the US. 

In June 2024, the IRS finalized regulations requiring US-based crypto brokers to report customer transactions through Form 1099-DA starting in 2026, and the latest development may involve it extending this regulation to CARF.

The White House also pointed out that the agencies “should not impose any new reporting requirements on DeFi transactions.” However, how this exemption would function in practice remains unclear and will likely face scrutiny during the regulatory review process.

Questions remain over implementation timeline

The proposed rules now face review by White House advisors; however, no timeline has been provided for a final decision. If it gets approved, the framework would need to be transposed into US law before taking effect, a process that could face both legislative and possibly industry resistance.

Privacy advocates and some crypto industry participants may raise concerns about automatic data sharing between governments, while there are questions on how US participation would integrate with the Common Reporting Standard (CRS) for traditional financial accounts, which Washington has declined to join.

For Americans holding crypto on foreign exchanges, joining CARF could effectively eliminate their ability to keep such holdings beyond the reach of US tax authorities.

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