The White House has begun reviewing the Internal Revenue Service (IRS) draft rule aimed at subjecting the foreign cryptocurrency accounts of U.S. residents and citizens to taxation and greater oversight. The evaluation by the Office of Information and Regulatory Affairs (OIRA) began on November 14, 2025, marking the start of a key regulatory step. The rule is framed within the adoption of the Crypto‑Asset Reporting Framework (CARF) of the OECD and promises to increase reporting requirements and compliance tools to close tax‑evasion channels.
The measure seeks to integrate the automatic exchange of crypto‑asset data among tax authorities internationally, as required by CARF, the standard promoted by the OECD and backed by the G20. CARF obliges participants to exchange information on crypto accounts and transactions, and several countries are expected to begin those exchanges between 2027 and 2028.
OIRA has exercised formal review of the rule since November 14, 2025 and may modify, delay or recommend technical adjustments before its final publication. This process situates the rule within broader executive oversight to ensure policy consistency and assess economic impact.
The IRS proposal intends for foreign platforms to submit granular data—movements, balances and identifying information of holders. In addition, it is linked to the implementation of intermediary reporting already foreseen, such as Form 1099‑DA, which began to be considered from 2025 to record operations on exchanges. The government’s explicit objective is to reduce the transfer of assets to offshore markets and level the competitiveness of domestic platforms.
Details of the proposal and link to CARF
Taxpayers with crypto accounts abroad will face greater compliance burdens and legal risks if they do not report detailed data. The penalties foreseen align with regimes applied to traditional foreign financial accounts, including significant fines and potential criminal proceedings in cases of serious evasion.
Tools such as blockchain forensic analysis, mandatory reporting by exchanges and data‑matching algorithms will increase the IRS’s ability to detect discrepancies, reinforcing enforcement capacity across jurisdictions.
Relevant operational uncertainties arise for traders and managers: many foreign exchanges may lack CARF‑compliant capabilities; self‑custodied wallets raise questions about whether they constitute reportable accounts; and activities on decentralized protocols complicate attribution of responsibilities. These ambiguities will likely generate litigation over jurisdiction, data privacy and the definition of a reportable event.
Operational implication for markets: greater transparency can reduce the capacity for evasion and, in the short term, increase the supply of assets in regulated markets, but it can also raise flow volatility until providers implement reporting processes and investors adjust positions for regulatory risk.
