In this episode, we unpack how the Crypto-Asset Reporting Framework (CARF) differs from its predecessors — FATCA and CRS — and why these differences matter for compliance and reporting transparency in the crypto era.
Key Takeaways:
- Transaction-Based Reporting:
- Unlike FATCA and CRS, which focus on income and asset values, CARF requires Reporting Crypto-Asset Service Providers (RCASPs) to disclose transactions made by reportable users.
- Who Reports:
- Under CARF, any entity or individual facilitating a relevant crypto transaction may be obligated to report — widening the net beyond traditional financial institutions.
- When Reporting Happens:
- Crypto assets are only reportable once a transaction occurs. For example, long-held Bitcoin that’s never moved doesn’t trigger reporting until it’s transacted — similar to “waiting for a submarine to surface.”
- Closing the Shell Bank Loophole:
- FATCA and CRS overlooked Professionally Managed Investment Entities (PMIEs) that weren’t required to report on themselves. CARF fixes this by “looking through” to the controlling persons behind such entities, potentially resulting in dual reporting by both the PMIE and the underlying Crypto-Asset Service Provider (CASP).
Why It Matters:
CARF represents a new phase in global transparency — bringing crypto within the same rigorous framework that transformed traditional finance under FATCA and CRS.
