In a significant move towards bolstering transparency in the realm of cryptocurrency, on November 10, 2023, 47 countries, including major economies like the United States, the UK, Singapore, Australia, Brazil, Canada, France, Japan, South Korea, and Switzerland, have committed to adopting the Crypto-Asset Reporting Framework (CARF).
Global adoption of CARF
Developed by the Organization for Economic Cooperation and Development (OECD), this international standard aims to automate information exchange between tax authorities, addressing the challenges posed by the rapidly evolving crypto-asset market. This significant transparency enhancement move came by 47 countries amid Bitcoin breaking its strong $35,000 resistance level, as well as a significant $400 million in crypto liquidation.
The CARF, designed to combat tax evasion and ensure compliance, presents challenges and opportunities for the crypto industry. While some enthusiasts may view increased regulation as a hurdle to the decentralized nature of digital currencies, it could simultaneously legitimize and stabilize the market, potentially attracting institutional investors and fostering mainstream adoption.
Also Read: U.S. Treasury Department revealed game-changing Crypto tax reporting rules
The implementation of CARF seeks to relieve compliant taxpayers by cracking down on evasion practices. Countries with active crypto markets are keen on swiftly incorporating CARF into their national laws, with plans to activate exchange agreements by 2027, following their respective legislative procedures.
Evolution of OECD’s Crypto transparency initiatives
However, last year on October 11, 2022, the OECD, along with its 38 member countries, including the US, Japan, South Korea, and several European nations, announced its plan to establish guidelines for improved visibility and transparency in crypto transactions and user activities.
Additionally, the OECD named the proposed framework Crypto-Asset Reporting Framework (CARF) during the G20 finance ministers and central bank governors meeting, as reported by Todayq News.
This collective effort underscores a global commitment to establishing a consistent and efficient system. The focus is on assisting businesses and governments in effectively managing crypto assets. The joint statement, issued by a diverse group of nations, invites other jurisdictions to join this initiative. The ultimate goal is to enhance the global system of automatic information exchange, eliminating potential tax evasion loopholes in the dynamic world of digital currencies.
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