Crypto service providers to ramp up transaction data collection under CARF, sharing begins in 2027

Crypto service providers in jurisdictions that participate in the Crypto-Asset Reporting Framework (CARF) will begin significantly increasing the scope and depth of transaction data collection and will start sharing that information with tax authorities in 2027. This change represents a major milestone in the global regulation of virtual asset service providers and reflects a push toward cross-border transparency and standardized reporting.

The upscaling effort will require service providers — including centralized exchanges, custodial wallet providers, and other intermediaries — to record and retain detailed counterparty and transactional metadata, implement enhanced Know-Your-Customer (KYC) processes, and adopt systems capable of securely transmitting data to designated authorities. These measures aim to reduce tax evasion, improve compliance, and enable jurisdictions to automatically exchange crypto-related tax information.

Operational implications for providers are substantial. Implementing CARF-aligned reporting demands investment in data infrastructure, secure storage, and encryption, as well as the development or procurement of analytics and matching tools to format records to the prescribed standards. Many firms will need to hire compliance and legal staff, update privacy notices, and negotiate data transfer agreements to meet cross-border legal requirements.

Technical challenges include integrating on-chain and off-chain data, mapping blockchain addresses to real-world identities, and ensuring data integrity while preserving necessary privacy protections. Service providers will also face the task of distinguishing reportable transactions (as defined under CARF) from routine or non-reportable activity, which requires robust transaction classification logic and frequent legal updates.

Privacy and legal considerations are front and center. While CARF promotes automatic exchange of information to tax authorities, companies must ensure they comply with domestic privacy laws and international data-protection standards. Many providers will rely on legal bases such as tax reporting obligations and public interest justifications, but some jurisdictions may require additional safeguards or local approvals before data transfers commence.

Market impact may be varied. For large regulated platforms, the changes could enhance trust and broaden institutional participation by reducing regulatory uncertainty. Conversely, smaller providers or decentralized platforms that lack the resources to comply may consolidate, adapt their service models, or exit certain markets. Users prioritizing privacy may shift to non-custodial solutions or privacy-enhancing tools, though such shifts could be met by increased regulatory scrutiny.

Timing and next steps: The formal exchange of CARF-aligned data is slated to begin in 2027, but the ramp-up period leading to that date will be critical. Providers should use the window to: (1) conduct gap analyses against CARF requirements, (2) design or upgrade data pipelines and KYC processes, (3) engage with legal counsel to align cross-border transfer mechanisms, and (4) communicate transparently with customers about data use and protection. Regulators and tax authorities will also need to publish technical specifications, clarity on thresholds and definitions, and onboarding processes.

Strategic recommendations for market participants include prioritizing modular, standards-based data architectures that can be adapted as CARF guidance evolves, investing in privacy-preserving technologies where feasible, and participating in industry working groups to shape practical implementation timelines. For users and advisors, it is prudent to anticipate enhanced reporting, review tax reporting obligations, and consider custody arrangements with compliance-capable providers.

Overall, the CARF-driven data collection and exchange effort marks a new phase in the global governance of crypto assets. The 2027 start of information exchange signals a shift toward harmonized tax transparency. Stakeholders who prepare early will be better positioned to manage compliance costs, protect customer trust, and adapt to an increasingly regulated cross-border environment.