CARF came into effect on 1 January 2026 in 47 jurisdictions, including the UK. It applies to reporting crypto asset service providers (RCASPs), defined as entities and individuals “effectuating exchange transactions” as a business. In practice, that includes any financial services businesses (or others) transferring money from one crypto asset to another or converting crypto assets into fiat (ie, government-backed) money and vice versa. 

For all involved, CARF is a significant change. For RCASPs, the duty to report transactions is entirely new for them and their customers. They must collect information on their users’ activities and tax residency and send it to their local tax authority. This information is then shared with other relevant jurisdictions that have joined CARF.   

Why CARF is needed 

The aim of CARF is to increase transparency and to allow authorities to close the tax gap in respect of crypto assets. However, the burden of calculating and reporting tax liabilities on crypto assets remains solely with the taxpayer. In other words, CARF is a risk assessment tool for HMRC, rather than being a tool able to calculate tax. Combined with the new crypto assets fields on the self-assessment tax return, CARF will make it easier for HMRC to assess whether taxpayers are declaring their crypto asset gains.

Under CARF, the aggregate of transactions for each type of crypto asset is provided. This is insufficient for calculating tax liabilities from a capital gains perspective. As both acquisition and disposal values are required, the RCASPs would have to provide the transactional information to determine the liability and gathering that data would create significant burdens.  

To illustrate the challenges involved, Seymour points to the Internal Revenue Service in the United States, which has taken a transaction approach for its domestic reporting regime. “Current estimates put the number of forms being provided at eight billion for between 13 and 16 million taxpayers”, he says. For Seymour this is a step too far for many jurisdictions: “The challenge of ingesting this amount of data cannot be underestimated, before even using the data”.  

The international context 

CARF’s 47 early adopters, including EU jurisdictions, the UK and its Crown Dependencies, South Africa and Uganda, have committed to undertaking first exchanges by 2027 with respect to the calendar year 2026. 28 other jurisdictions, including Australia, Hong Kong, and Switzerland, have committed to the second wave and will exchange information by 2028, and the US has indicated that it will undertake exchanges by 2029, as set out here. Differences in implementation dates could cause issues for RCASPs who operate across borders.

Schofield also points to uncertainty regarding the practicalities of implementation in the early adopter jurisdictions, as few jurisdictions have published guidance, and some have not yet made their implementing regulations. “RCASPs in these jurisdictions may find themselves building on sand”, warns Schofield.  

CARF continues to evolve 

CARF was agreed on 13 July 2022. Since then, the world of crypto assets has not stood still. The Organisation for Economic Co-operation and Development (OECD) publishes frequently asked questions (FAQs) to provide guidance on interpreting the rules and evaluates the FAQs through its work with the Business Advisory Group (BAG) to ensure the sector's needs are met. The inevitable evolution of crypto assets means that CARF must continue to develop, and at a faster pace than is usual in tax transparency agreements. 

With staggered implementation and a fast-moving market, uncertainty will remain for some time. However, for Schofield, the direction of travel is clear: “the era of crypto assets operating outside the international tax reporting framework is coming to an end”.