The White House is conducting a crucial review of new IRS regulations designed to track and tax cryptocurrency holdings in foreign accounts held by U.S. citizens. The proposed framework aligns with the Crypto-Asset Reporting Framework (CARF), an international agreement that would facilitate cross-border information sharing between tax authorities worldwide.
In a significant move that could reshape how Americans report their overseas digital assets, the Trump administration is advancing regulatory measures to bring foreign cryptocurrency holdings under closer IRS scrutiny. The proposed rule, currently under White House review, represents a pivotal step toward joining the Crypto-Asset Reporting Framework (CARF), a multilateral tax information exchange agreement.
CARF, developed by the Organization for Economic Cooperation and Development (OECD), aims to create a standardized global reporting system for cryptocurrency transactions and holdings. Under this framework, foreign exchanges and digital asset service providers would be required to report information about U.S. account holders directly to the IRS, similar to existing protocols for traditional financial accounts under the Foreign Account Tax Compliance Act (FATCA).
The administration's support for CARF marks a notable shift in the U.S. approach to cryptocurrency taxation. By joining this international coalition, the IRS would gain unprecedented visibility into Americans' offshore crypto activities, making it significantly more difficult for taxpayers to conceal digital assets held on foreign platforms. This enhanced transparency could potentially recover billions in unpaid taxes while leveling the playing field between domestic and international crypto exchanges.
Industry experts suggest the rule could have far-reaching implications for U.S. crypto investors who have historically used foreign exchanges to maintain privacy or access services unavailable domestically. Once implemented, these platforms would need to collect detailed customer information and report account balances, transactions, and gains to American tax authorities.
Critics of the proposed regulation argue it may drive innovation offshore and disadvantage American investors, while proponents maintain that consistent tax enforcement is essential for cryptocurrency's legitimacy and integration into mainstream finance. The regulatory framework also raises questions about privacy, data security, and the practical challenges of implementing comprehensive reporting across diverse international jurisdictions.
As the White House review progresses, the crypto community awaits clarity on implementation timelines and specific reporting thresholds. The outcome will likely influence how millions of Americans manage their digital asset portfolios and could set a precedent for how governments worldwide approach cryptocurrency taxation in an increasingly borderless financial landscape.