The OECD is an intergovernmental organization encompassing 38 member nations. The body resembles a think tank that recommends international standards for economic policy and financial crime crime reduction, with participating nations implementing the standards to avoid being black listed by fellow OECD nations. In recent years, it's focused on international tax reform through its Common Reporting Standard (CRS).
The G20 tasked the OECD with developing a framework for information sharing among crypto providers in different jurisdictions. Now, the OECD is circulating a draft of the first portion of its Crypto Asset Reporting Framework (CARF), an in-progress proposal that will ultimately designate standards for the collection and exchange of information during crypto transactions, particularly related to tax reporting.
This first draft contains rules and commentary on that will become recommendations for countries' to implement in their domestic policy. The final version will also contain a framework for nations to create agreements for the exchange of crypto transaction information as well as suggested technical solutions for the exchange of that information. This includes amendments to the CRS to facilitate the transfer of this information among different tax jurisdictions and cover the use of central bank digital currencies.
Exchanges from crypto to fiat, crypto to crypto, retail payment transactions and crypto transfers are reportable transactions under the CARF. Crypto asset service providers are responsible for identifying their users, determining relevant tax jurisdictions and collecting the necessary information for that jurisdiction's tax standards.
The requirements build on the asks of the Financial Action Task Force's travel rule, which requires crypto firms to exchange know your customer information for the recipient and sender of a transaction to curb illicit financial activity. Similarly, the CARF would require firms collect and report the name, address, jurisdiction, taxpayer identification number, date and place of birth for each user making a reportable transaction.
But it goes a step further in collecting relevant tax information, like the type of crypto asset, aggregate gross amount paid and received, aggregate fair market value in comparison to other relevant assets and wallet addresses.
The document is still in the early stages. With the recommendations is a number of questions for industry players addressing key taxation questions, like which categories income from mining, staking, forks or airdrops should fall under, and addressing the industry on whether the proposed reporting standards are possible to meet with the current tools available.
Comments can be submitted by email until April 29 of this year. A public consultation meeting on the draft is slated for the end of May.