TaxBit noted that this past month, the Organization for Economic Co-operation and Development (OECD) released updated guidelines for its Crypto-Asset Reporting Framework (CARF), delivering clarifications for crypto / digital assets platforms navigating the global compliance environment.
These updates address ambiguities in decentralized finance (DeFi), non-fungible tokens (NFTs), mergers and acquisitions (M&A), and alignment with the Common Reporting Standard (CRS), while also shedding light on extraterritoriality under the EU’s DAC8 directive.
With the first CARF deadlines approaching in 2026, these changes are pivotal for Reporting Crypto-Asset Service Providers (RCASPs).
A significant update clarifies DeFi’s inclusion under CARF through the “Control or Sufficient Influence” (COSI) test.
Previously, non-custodial platforms assumed exemption from reporting obligations.
However, the OECD, aligning with the Financial Action Task Force (FATF), now specifies that entities exerting control over a protocol—through holding administrative keys, participating in DAO governance, managing interfaces, or operating automated market makers (AMMs)—may be classified as RCASPs.
This means DeFi platforms are not automatically exempt, though jurisdictions may defer enforcement pending further guidance.
Crypto platforms must assess their operational roles to determine reporting obligations, as decentralized architecture alone no longer ensures exclusion.
This shift signals a broader regulatory net, urging DeFi platforms to prepare for compliance.
The OECD introduced a four-part test to determine when NFTs are exempt from CARF reporting.
NFTs are excluded if they do not represent financial or fungible assets, are not marketed as investment products, are not classified as virtual assets under FATF’s anti-money laundering definitions, and have low value (e.g., below USD 200) with no significant trading volume.
This provides clearer criteria for distinguishing utility NFTs from investment-grade assets, with the $200 threshold offering a benchmark. However, platforms must monitor local implementations, as jurisdictions may vary in their thresholds, necessitating tailored compliance strategies.
For RCASPs involved in mergers or acquisitions, the OECD confirms that platforms can rely on an acquired entity’s existing due diligence data for Crypto-Asset Users and their Controlling Persons, unless inaccuracies are suspected or circumstances change.
This clarification is timely, given increased M&A activity driven by market consolidation and stricter licensing regimes.
By reducing redundant onboarding efforts, this update streamlines compliance during business transitions, enabling faster integration for platforms undergoing mergers or large-scale transitions.
The FAQs align CARF with the CRS, stating that entities classified as Financial Institutions under CRS (except certain investment entities) are treated as Excluded Persons under CARF.
This harmonization minimizes redundant classifications, simplifying compliance for platforms already adhering to CRS.
However, unresolved questions remain, particularly regarding tokenized financial instruments and stablecoins (termed “Specified Electronic Money Products”).
Platforms must stay vigilant for further guidance to ensure compliance across both frameworks.
CARF itself does not mandate extraterritoriality, but the EU’s DAC8 directive, alongside jurisdictions like Switzerland and Brazil, introduces an economic nexus model.
RCASPs serving users in these regions, even via reverse solicitation, must register and collect data by January 1, 2026, with reporting starting in 2027.
Non-compliance risks penalties of €20,000 to €500,000. Platforms in non-participating jurisdictions like the US or UAE may still face obligations if they serve users in CARF/DAC8-active regions.
Duplicative reporting can be avoided if a platform’s home jurisdiction joins a CARF-aligned multilateral exchange agreement.
This underscores the need to assess user geography and operational footprints.
While these updates enhance regulatory clarity, gaps persist, particularly around DeFi’s COSI test and NFT thresholds.
The OECD’s FAQs, combined with tools like Taxbit’s automated reporting and Digital Self-Certification SDK, offer platforms solutions to meet these mandates.
With CARF and DAC8 set to reshape the digital asset landscape by 2026, platforms must act now to implement KYC and transaction-monitoring systems.
By leveraging guidance and technology, RCASPs can transform compliance into an advantage, fostering transparency in the crypto economy.