White House Reviews IRS Proposal to Access Americans' Overseas Crypto Holdings via CARF

The White House is currently reviewing proposed rules from the Treasury Department that would allow the Internal Revenue Service (IRS) to gain unprecedented access to Americans' overseas cryptocurrency holdings. This initiative is part of a broader effort to join the Crypto-Asset Reporting Framework (CARF), an international agreement developed by the Organization for Economic Cooperation and Development (OECD) in 2022 to combat offshore tax evasion through automatic information sharing.

CARF has already been adopted by most G7 nations, including Japan, Germany, France, Canada, Italy, and the United Kingdom, as well as major crypto hubs like the UAE, Singapore, and the Bahamas. The framework aims to create a comprehensive system for monitoring cross-border crypto transactions, involving mechanisms such as international cooperation with foreign tax authorities, enhanced reporting requirements for crypto exchanges, advanced blockchain analysis tools, and increased information sharing between governments.

The proposed policy, set for global implementation in 2027, could significantly impact U.S. investors by increasing compliance requirements, potentially uncovering unreported assets leading to tax liabilities, reducing privacy for international transactions, and intensifying scrutiny of cross-border digital asset transfers. Notably, the rules are expected to exempt decentralized finance (DeFi) transactions from new reporting requirements. The Trump administration's crypto advisors have endorsed this move, stating it would discourage U.S. taxpayers from moving digital assets abroad and promote the growth of digital assets in the United States.