G20 Leaders Push for Speedy Implementation of Crypto Asset Reporting Framework

Leaders of the 20 biggest economies in the world, collectively known as G20, are urging for a swift implementation of a cross-border framework for crypto assets. The framework, known as the Crypto-Asset Reporting Framework (CARF), will promote information exchange between countries, with exchanges set to begin in 2027. A consensus declaration signed by G20 leaders during their two-day summit in New Delhi called for the implementation of CARF and amendments to the Common Reporting Standard (CRS).

A Global Effort

The implementation of the CARF would impact several countries, including Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union. With two-thirds of the world's population residing in a G20 country, this initiative has significant global implications.

Greater Visibility for Tax Authorities

The CARF, first introduced by the Organization for Economic Cooperation and Development (OECD) in October 2022, aims to provide tax authorities with increased visibility into crypto transactions and the identities of individuals involved. The framework will facilitate automatic information exchange on crypto transactions between jurisdictions annually, covering transactions on unregulated crypto exchanges and wallet providers.

Crypto transactions have already been subject to new disclosure standards in many countries. In May, the European Union approved updated rules adhering to the CARF, which require the transfer of digital assets to include the name of the beneficiary, the beneficiary's distributed ledger address, and the beneficiary's account number for improved transparency and accountability.

A Comprehensive Approach

In addition to endorsing the CARF, G20 leaders also supported recommendations from the Financial Stability Board (FSB) regarding the regulation and oversight of crypto assets and stablecoins. These recommendations, published in July, propose similar standards for stablecoins as those imposed on commercial banks. Regulators are encouraged to prohibit any activities that hinder the identification of those involved in stablecoin arrangements.

The implementation of the CARF, along with the G20's support for FSB recommendations, highlights a growing recognition among global leaders of the need for greater transparency and regulation in the crypto space. By establishing a cross-border framework for crypto asset reporting, G20 leaders aim to enhance international cooperation and combat illicit activities associated with cryptocurrencies.