cryptocurrency ban: ‘Global info-sharing rules won’t end sovereign freedom to ban cryptos’

Synopsis

The OECD presented a framework for reporting crypto assets to the G-20 finance ministers in Washington last week. The think-tank is expected to soon start the implementation process for the proposed Crypto Asset Reporting Framework (CARF).

The CARF envisages an automatic exchange of tax information relating to transactions in crypto assets in a standardised manner.The proposed global information-sharing framework for crypto assets doesn’t provide legitimacy to digital currencies and does not take away sovereign freedom to impose bans, an Organisation for Economic Co-operation and Development (OECD) official told ET.

The OECD presented a framework for reporting crypto assets to the G-20 finance ministers in Washington last week. The think-tank is expected to soon start the implementation process for the proposed Crypto Asset Reporting Framework (CARF).

The plan for a global information-sharing arrangement follows growing concerns worldwide over opacity in transactions in crypto assets and a lack of regulatory oversight of intermediaries dealing in them.
graph“The CARF is designed to be implemented by jurisdictions to deliver tax transparency in the crypto-asset market and therefore does not prejudice the decision of jurisdictions to put in place bans or other limits on (transacting in) crypto-assets,” Phillip Kerfs, head, International Cooperation Unit, Centre for Tax Policy and Administration, OECD, told ET in an e-mail interaction.

The OECD is also currently assessing the implications of the CARF vis-a-vis jurisdictions that have imposed such bans. Less than a dozen countries, including China, have imposed a ban on cryptocurrencies.

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Kerfs said implementation and information exchange dates were yet to be determined.

The OECD will, as the immediate next step, advance work to develop a coordinated implementation timeline for both the CARF and the amended Common Reporting Standard, he said.

The CARF envisages an automatic exchange of tax information relating to transactions in crypto assets in a standardised manner. It details rules and commentary that can be transposed into domestic laws to collect information from a Reporting Crypto-Asset Service provider envisaged in the framework. It defines relevant crypto assets in scope, transactions, and the intermediaries and other service providers that will be subject to reporting.

Addressing concerns over increased compliance, Kerfs said the OECD has consulted with the Business Advisory Group throughout the process and the CARF reflects stakeholder input received through a public consultation process earlier this year.

The Business Advisory Group is an informal group of academics, business representatives and consultants that provides inputs from the business community.

Kerfs said, “a major benefit of the CARF is that it offers a standardised reporting framework that is aligned with the FATF AML/KYC requirements”.

“In absence of the CARF, the industry would be exposed to a proliferation of diverging domestic reporting requirements, which would undoubtedly lead to more onerous compliance burdens.”

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Updated: 10/19/2022 — 22:00