The Organization for Economic Cooperation and Development (OECD) has introduced a new tax structure for cryptocurrencies.
During a two-day ministerial-level meeting held by the OECD Council on June 7 and 8, the participants presented the Crypto-Asset Reporting Framework (CARF).
The purpose of the Crypto-Asset Reporting Framework is to combat tax evasion and enhance transparency in the globalized and digitalized economy. It includes changes to the Current Common Reporting Standard (CRS) and outlines the assets and entities involved in cryptocurrency transactions.
The framework also establishes procedures for gathering necessary tax information and establishes a multilateral authority responsible for enforcing these regulations.
Additionally, it introduces an electronic framework (XML) for sharing information among relevant authorities. The framework covers various aspects of the crypto world, including wallets, exchanges, distributed ledger technology (DLT), and derivatives based on digital assets.
It also introduces the term “Specified Electronic Money Product,” which refers to virtual versions of fiat money. Furthermore, the framework recognizes the potential tax compliance obligations associated with Central Bank Digital currencies (CBDCs).
The role of OECD in shaping regulatory approaches
One key aspect of the framework is that it guides regulators in formulating cryptocurrency laws. The OECD is a global organization that sets standards for employment, taxation, education, and climate change.
While compliance with these standards is not mandatory, they play a significant role in shaping regulatory approaches. Although enforcing the framework may pose challenges, its objective is clear: to ensure proper taxation of the Bitcoin industry.
Introduction of this tax framework demonstrates tax authorities’ intention to address tax obligations related to cryptocurrencies, even though the specific strategies for achieving compliance are still unknown.
The release of the OECD’s tax reporting methodology comes when the cryptocurrency industry faces increasing regulatory pressure, particularly in the United States.
On June 6, the US Securities and Exchange Commission (SEC) took action by filing complaints against Binance and Coinbase, alleging that they had failed to register over ten significant cryptocurrencies as securities.
If successful, the SEC would gain jurisdiction over these identified cryptocurrencies, leading to stricter investor protection and tax reporting regulations.
