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The White House is reviewing a federal proposal that would require foreign cryptocurrency exchanges to report transaction data on U.S. customers to the Internal Revenue Service, potentially aligning American tax rules with a global transparency framework adopted by dozens of countries.
The proposal, which reached the Office of Information and Regulatory Affairs on Friday for policy review, would implement reporting requirements similar to the Crypto-Asset Reporting Framework (CARF)—an international standard designed to help tax authorities track cross-border digital asset transactions and prevent offshore tax evasion.
In its digital asset report published earlier this year, the White House identified deficiencies in U.S. oversight of cross-border transactions and emphasized the importance of harmonizing domestic rules with international frameworks.
One key recommendation urged the IRS and Treasury to consider aligning with the Crypto-Asset Reporting Framework (CARF), a global initiative designed to enhance transparency around offshore crypto data.
Under CARF, digital asset service providers would be required to share transaction information with regulators, helping authorities identify and track offshore crypto data connected to U.S. taxpayers. The administration stated that such alignment would reduce incentives for users to move assets to foreign exchanges to avoid detection.
“Adopting the framework would reduce incentives for U.S. taxpayers to move assets to offshore exchanges,” — White House report.
“It would also help prevent the U.S. from falling behind jurisdictions that already apply similar reporting standards,” — White House report.
The report further argues that greater transparency around offshore crypto data could support healthier domestic markets by reducing regulatory arbitrage. However, the administration also cautioned that such rules must be crafted carefully to avoid unnecessary compliance burdens.
While the administration is considering a stronger approach to offshore crypto data, officials have stressed that decentralized finance should not be subject to expanded reporting requirements.
In its earlier report, the White House wrote that new rules “should avoid imposing additional reporting demands on decentralized finance transactions,” signaling a clear boundary regarding the treatment of DeFi.
This distinction indicates that while offshore crypto data may be subject to greater scrutiny, activity conducted through decentralized protocols will continue to remain outside the proposal’s current scope.
The decision reflects concerns from legal and technical experts that DeFi reporting mandates could be impractical, unenforceable, or inconsistent with the underlying architecture of decentralized platforms.
The White House believes enhanced oversight of offshore crypto data could improve tax compliance while strengthening the integrity of domestic digital asset markets. Officials argue that aligning with global standards would position the U.S. alongside jurisdictions already implementing CARF-compliant strategies.
Supporters of the proposal contend that regulators require access to offshore crypto data to prevent tax avoidance through foreign exchanges. Critics, however, warn that expanding reporting obligations could deter innovation or push activity into less regulated jurisdictions.
The proposal remains under review, and no final decision has been announced. For now, the administration continues to weigh how expanded IRS access to offshore crypto data would affect taxpayers, service providers, and the broader digital asset ecosystem.
