If you hold a meaningful crypto portfolio, the coming years are going to look very different from the early days of digital assets. Governments are rolling out a coordinated global system so that crypto is reported and automatically shared across borders, similar to how foreign bank accounts are already reported under the Common Reporting Standard and United States regimes such as FATCA.
The core of this change is the OECD Crypto Asset Reporting Framework, usually shortened to CARF. It is designed to bring crypto platforms into the same automatic exchange of information system that already applies to banks and other financial institutions. You can see the joint statement by early signatory countries on the official United Kingdom site at this page and the technical step by step guide published by the OECD at this document.
For crypto investors, this means three very practical things.
- The era of assuming that crypto is invisible to tax authorities is ending
- Your residency, citizenship, and ties to high tax countries will matter more than ever
- You still have time before 2027 to restructure your affairs legally and put yourself on a compliant and efficient footing
The goal of this article is to give a fact based overview of what is coming and practical, lawful recommendations for preparing before crypto asset reporting 2027 is fully in force.
Nothing here is personal tax advice. Laws are complex and fast changing, so you should always speak with a qualified tax adviser in your current country and in any country you intend to move to.
What CARF is and how it works
CARF is an international standard created by the OECD for automatic exchange of information related to crypto assets. It sits alongside the Common Reporting Standard, which already covers foreign bank and investment accounts. The OECD explanation and summary can be found in its step by step guide at this link.
Under CARF, countries agree to require certain entities, called reporting crypto asset service providers, to collect and report information on their users. These providers typically include:
- Centralised exchanges
- Brokers and dealers that intermediate crypto trades
- Some custodial wallet providers
- Other platforms that allow customers to transact in reportable crypto assets
The information reported under CARF will generally cover:
- Identification details about the user
- Name
- Address
- Jurisdiction of tax residence
- Tax identification number
- Details about the account or wallet at the platform
- Annual totals of crypto related activity, such as
- Gross proceeds from disposals
- The number of units of each crypto asset sold or exchanged
- The fair value of certain transfers and payments
Tax authorities in the jurisdiction where the platform is located will then automatically share that information with the tax authorities in the jurisdictions where the users are resident, under a network of information exchange agreements.
A few key points for investors:
- You do not need to live in a country for that country to receive information about you if you are tax resident there
- The reporting follows your tax residency status, not just your passport
- Many countries will start requiring platforms to collect the relevant data from 2026 so they can exchange information in 2027 or shortly after
Which countries are committing to CARF and when
A joint statement on 10 November 2023 confirmed that dozens of jurisdictions intend to implement CARF in time to start exchanges from 2027. The text of that joint statement is available on the United Kingdom government site at this link. Commentary and summaries from international firms, such as KPMG at this article, underline that more than half of the biggest global economies have made such commitments.
Australia, New Zealand, and the United Kingdom are all among the early signatories. That means investors resident in these countries can expect their tax authorities to receive detailed data from both local and foreign exchanges once CARF style exchanges commence.
In summary:
- More than sixty jurisdictions have publicly committed to implement CARF by 2027 or 2028
- The committed group includes most European Union states, the United Kingdom, Australia, New Zealand, Canada, Japan, Korea, and several classic offshore centres
- Domestic laws in many of these countries are already being updated so that resident platforms will begin collecting CARF type data in advance
For investors, the practical result is:
- If you use a centralised exchange based in a CARF country, you should assume your activity will be visible to your home tax authority
- Even if your current country has not yet committed, it may do so before 2027
- Non reporting countries should be treated as temporary rather than permanent shelters, as political pressure tends to increase once large economies coordinate around transparency
How Australia, New Zealand, and the United Kingdom already treat crypto
Australia
The Australian Taxation Office treats most crypto assets as a form of property for tax purposes. The ATO guidance for individuals at this page and the detailed capital gains guidance at this page explain that:
- When crypto assets are held as investments, disposals usually trigger capital gains tax on any net gain for the year
- Certain personal use transactions may qualify for an exemption when the cost is below a threshold, as discussed at this ATO page, though recent commentary such as the article at this advisory notes that this exemption is narrow
- Record keeping is a strong focus, and the ATO uses data matching from exchanges and banks to check compliance
Once CARF exchanges are live, Australian residents can expect ATO data matching to extend to many more foreign platforms, which means that undisclosed overseas exchange accounts become much more visible.
New Zealand
New Zealand does not have a separate capital gains tax, but in practice many crypto activities are taxable as income. Inland Revenue explains its approach to crypto assets at this page and gives further detail on income treatment and record keeping at this page and this page.
Key points include:
- Many investors are considered to have acquired crypto with an intention to sell, so profits are taxable as income
- New Zealand dollar values must be used in returns, and full records of every transaction are required
- There is growing enforcement interest, as described in independent commentary at this article
With New Zealand also signed up to CARF, residents should expect Inland Revenue to receive reports on their holdings and trades at foreign exchanges, not only at local or regional platforms.
United Kingdom
In the United Kingdom, HMRC guidance confirms that most individuals are treated as investors who are subject to capital gains tax on disposals of crypto assets. You can read the main government guidance at this page and the internal crypto manual at this page.
Independent summaries, such as the Deloitte note at this article and the Blockpit overview at this guide, explain that:
- Profits from selling, trading, spending, or gifting crypto (other than to a spouse or civil partner) are generally subject to capital gains tax
- Crypto income from mining, staking, or services can be subject to income tax
- United Kingdom residents are taxed on their worldwide gains, so foreign exchange accounts are within scope
Recent reporting in the financial press, including coverage in the Financial Times at this link, shows that HMRC enforcement on undeclared crypto gains is accelerating, with tens of thousands of warning letters and increasing use of data from exchanges. CARF data flows from 2027 are likely to strengthen this trend.
Crypto is already traceable even without CARF
Crypto has never been truly anonymous. Public blockchains such as Bitcoin and Ethereum are transparent by design. Law enforcement agencies and blockchain analytics companies already track addresses, clusters, and flows to link transactions to real individuals. Detailed discussions of this reality can be found in many public sources, including educational material from major analytics providers and court filings in criminal cases.
CARF does not create blockchain traceability. What it does is:
- Standardise and automate the flow of off chain data held by exchanges and custodians
- Tie addresses and transaction histories to verified identity information
- Plug that combined data into the existing Common Reporting Standard type exchange networks
So even if you self custody your coins, any interaction with a compliant platform can create a data trail that will be reported under crypto asset reporting 2027 rules.
High level recommendations before crypto asset reporting 2027
Here are strategic but lawful steps that many serious investors are considering as CARF and related rules come into force. Always confirm feasibility and legality with professionals in your own circumstances. These points are for education, not personalised advice.
Get fully compliant where you are right now
Before you think about moving or restructuring, it is important to fix the basics.
- Review your past tax filings
- Have you reported your crypto disposals and income as required
- Are you up to date with capital gains and income declarations
- Build proper records
- Export transaction histories from all exchanges and wallets you have used
- Keep a record of deposit and withdrawal addresses, fiat on ramp and off ramp flows, and dates and values of major trades and transfers
- Consider voluntary disclosure programs where available
- Some countries offer reduced penalties for taxpayers who come forward before an investigation begins
The aim is to enter the CARF era as a compliant taxpayer rather than hoping that incomplete records remain unseen.
Understand your current tax residency and ties
Under CARF and the Common Reporting Standard, tax residency is the anchor point for who sees your information. Many people underestimate how easily a country can still treat them as resident even after they leave.
Common ties that can maintain residency or create ongoing tax exposure include:
- Owning a home that is available for your use
- Maintaining local bank accounts and credit cards
- Keeping a local company active
- Spending significant time in the country each year
- Having close family still living there
Countries such as Canada, United Kingdom, and Australia use concepts like centre of vital interests or similar tests when deciding if you have truly left their tax net. If you are planning to realise large crypto gains in the coming years, it is vital to understand whether your current country will still claim taxing rights even if you move.
That usually requires:
- A formal exit plan
- Evidence that you have established tax residence in another country
- Documentation that you have severed enough ties to shift your centre of life
Considering a move to a more crypto friendly tax regime
As western countries increase enforcement and expand frameworks such as CARF, some smaller or emerging economies position themselves as more attractive destinations for entrepreneurs and investors.
Examples often cited include jurisdictions with one or more of these features:
- Low general income tax rates
- No tax on foreign source income
- Reasonable or zero tax on crypto gains for non residents or new residents
- Clear residency regimes that are accessible for entrepreneurs or high net worth individuals
Andorra as a case study
Andorra, a small state between Spain and France, historically attracted wealth partly because of low taxes. In recent years it has introduced taxes but kept them at relatively modest levels. Public summaries by Andorran advisers and international firms explain that:
- Capital gains from the sale of cryptocurrencies by individuals are generally taxed at a flat rate around ten percent
- Corporate tax rates for companies are also capped at about ten percent
- This is significantly lower than typical rates in nearby Spain or France for high income individuals and companies
The trade off, as the original transcript you shared notes, is that many residents must spend a substantial portion of the year physically present in Andorra to maintain their status, which can limit mobility.
Paraguay and territorial tax
Paraguay has attracted attention because of its territorial style tax system and relatively light overall tax burden. Various tax firm summaries describe that:
- Residents are generally taxed only on Paraguayan source income, while foreign source income can be exempt in many cases
- Personal income tax and corporate tax rates on local income are often around ten percent
For a crypto investor who earns most income from activities outside Paraguay, a properly structured move could result in a very light tax burden on foreign crypto gains. The details depend heavily on domestic law and on whether Paraguay treats certain crypto activity as local or foreign source.
Other emerging options
Other countries frequently discussed in the context of crypto and tax residency include:
- El Salvador, which has made Bitcoin legal tender and offers several investor and residency programs
- Some Balkan states that combine relatively low taxes with increasing safety and infrastructure
- Southeast Asian and African countries exploring territorial regimes or special incentives for remote workers
- New programs in places such as Malaysia and Paraguay that exempt much foreign source income and thereby attract remote earners
The key takeaway is not that any one country is ideal. Instead, it is that crypto asset reporting 2027 will encourage more investors to make deliberate choices about where they are resident and why.
How to think about countries that are not in CARF yet
Online discussions often focus on finding countries that have not signed CARF or the Common Reporting Standard, with the hope that these will remain invisible pockets forever. In practice, this is risky thinking for several reasons.
- The list of committed jurisdictions keeps growing, and states that initially held back often join once their neighbours do
- Even if a country does not adopt CARF, it may still share information through bilateral tax treaties, law enforcement requests, or other mechanisms
- Banks in non CARF states can still be pressured from abroad through correspondent banking relationships and sanctions regimes
Therefore, a more robust strategy is to:
- Assume that anything you do through a centralised or regulated platform will eventually be visible
- Focus on choosing a tax residency where you are comfortable being fully transparent
- Use the time before 2027 to align your personal structure with jurisdictions that respect investors while still operating within the law
Managing your ties to high tax western countries
If you currently live in a high tax country that is committed to CARF, such as most European Union states, the United Kingdom, Australia, New Zealand, or Canada, simply opening an account abroad will not remove you from their tax net.
Key principles to keep in mind:
- You generally need to become resident somewhere else, not just stop being resident where you are
- You may need to sell or restructure domestic assets, such as primary residences, local companies, and some tax deferred vehicles
- Some countries have exit taxes that trigger a deemed sale of certain assets, including shares and sometimes crypto, when you cease residency
Practical preparatory steps:
- Obtain a written opinion from a specialist on what you need to do to cease residency
- Build a checklist of ties you must cut, including property ownership, local registrations such as a driving licence, and business interests
- Make a timeline that coordinates your physical move, registration in the new country, and realisation of large crypto gains
The aim is not to vanish, which is increasingly difficult, but to become a transparent taxpayer in a jurisdiction whose rules you accept.
Custody choices and exchange risk in the CARF era
Even before CARF, centralised exchanges posed a double risk:
- They are a single point of failure for hacks, insolvency, or mismanagement, as seen in several high profile collapses
- They are centralised sources of data that governments can compel to report
CARF will formalise and extend the second risk. In most CARF countries, exchanges and other reporting crypto asset service providers will have legal duties to identify customers and report their activity.
Practical recommendations:
- Prefer self custody for long term holdings
- Use reputable hardware wallets
- Implement secure backup procedures
- Consider multisignature setups for large portfolios
- Use exchanges only when necessary
- On ramp and off ramp between fiat and crypto
- Short periods for active trading
- Keep clear records of all movement between self hosted wallets and exchanges, because tax authorities may ask you to reconcile address flows once exchange data begins to arrive
Self custody does not make you invisible, especially if funds move through regulated platforms, but it does reduce counterparty and censorship risk.
Cashing out and spending in a post CARF world
Even if your crypto remains on chain, at some point you will likely want to use it. In a post CARF environment, banks and property sellers in most mainstream countries will be more cautious about crypto sourced funds.
You can already see this in:
- Enhanced due diligence questions when funding real estate purchases from crypto proceeds
- Banks asking for transaction histories and proof of origin of funds
- Increased scrutiny when sending or receiving money to and from jurisdictions perceived as higher risk
To prepare:
- Choose banks in jurisdictions that are friendly but still reputable
- Build a clean audit trail of your crypto history
- Use on ramps and off ramps that are known for compliance rather than obscure platforms that may later be blacklisted
- Consider spending directly in crypto where legal and practical, but remember that spending can also be a taxable event in many countries
How crypto asset reporting 2027 interacts with CRS and FATCA
For many investors, CARF is only one piece of the puzzle.
- The Common Reporting Standard already requires financial institutions in participating countries to report foreign account holders to their home jurisdictions
- FATCA requires foreign financial institutions to report United States persons to United States authorities, regardless of where they live
CARF extends similar logic into crypto. For example:
- An Australian resident using an exchange in Europe may see their account reported to the Australian Taxation Office once exchanges of CARF data begin
- A New Zealand resident using an exchange in a Caribbean financial centre that has signed CARF could have their data sent back to Inland Revenue
- A United Kingdom resident using a foreign platform will remain within the worldwide tax net that HMRC applies to residents, so CARF data will complement existing flows
If you are a citizen of a country that taxes on the basis of citizenship, such as the United States, you may remain subject to that tax system even if you change residency, and CARF data will likely complement existing FATCA and Common Reporting Standard flows.
The main message is that you should think in terms of your overall international profile, not just one regime at a time.
Action checklist before crypto asset reporting 2027
To bring everything together, here is a practical checklist you can work through in the next years. Use it as a starting point for conversations with advisers.
- Clarify your situation
- Map your current citizenships, residencies, and days spent in each country
- List all exchanges, custodians, and wallets you have used
- Estimate your unrealised crypto gains and potential future gains
- Fix compliance gaps
- Gather and store full transaction histories
- Reconstruct missing data using blockchain explorers and old statements
- Work with a tax professional to correct past filings if needed
- Decide on your long term tax base
- Evaluate whether you are comfortable remaining in your current country under CARF
- If not, research alternative residencies with clear rules, manageable physical presence requirements, and transparent treatment of crypto and foreign income
- Pay attention to exit tax and tie breaking rules when leaving a high tax state
- Align your custody structure
- Shift long term holdings to self custody with robust security
- Reduce reliance on a single exchange
- Maintain documentation linking exchange addresses and self hosted addresses
- Plan your cash out strategy
- Identify friendly banks and payment routes compatible with your chosen residency
- Consider timing large disposals to align with your move or new status
- Expect detailed questions about origin of funds and be ready with evidence
Final thoughts
Crypto grew up in a world where regulation lagged far behind technology. That gap is closing. With CARF, updates to the Common Reporting Standard, and domestic rules converging in countries such as Australia, New Zealand, the United Kingdom, and many others, tax authorities will soon have a much clearer view of global crypto wealth and flows.
Crypto asset reporting 2027 should not be seen as the end of opportunity. Instead, it is the point at which serious investors separate themselves by:
- Embracing transparency on their own terms
- Carefully choosing where they live and pay tax
- Structuring holdings and custody so that they are secure, compliant, and flexible
If you start preparing now, you can enter the CARF era with clarity instead of fear, and with a global lifestyle and tax position that supports your long term crypto strategy rather than undermining it.
