Canada is set to adopt the international Crypto-Asset Reporting Framework (CARF) by 2026, as outlined in a supplement to the 2024 annual budget. This move puts Canada ahead of the curve, as 47 countries are expected to follow suit by 2027.
Under the CARF, crypto asset service providers (CASPs) such as cryptocurrency exchanges, brokers, dealers, and automated teller machine operators, whether individuals or businesses, will face new reporting requirements. The supplemental report provides examples of crypto assets, including stablecoins, derivatives issued in crypto form, and specific nonfungible tokens.
CASPs will be obligated to report transactions involving crypto assets and fiat currencies, as well as transactions between different crypto assets, to the Canada Revenue Agency (CRA). Additionally, any crypto asset transfers conducted by CASPs, including payment processing, exceeding a value of $50,000 USD, will need to be reported. The requirements will apply to CASPs residing or operating in Canada, as well as transactions involving Canadian residents and nonresidents, both individuals and entities.
It is worth noting that central bank digital currencies and “digital representations of fiat currencies,” such as stablecoins, will not fall under the CARF reporting requirements, as they are already accounted for through amendments to the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS) for international tax authorities’ information sharing.
Similar to the CRS, the CARF was developed by the OECD and aims to address the limitations of traditional financial intermediaries in capturing certain transactions. The information collected under the CARF will also be shared internationally, aligning with the OECD’s objective.
The CARF was introduced by the OECD at a meeting of G20 finance ministers and central bank governors in October 2022. Following this, 47 countries pledged to incorporate the CARF into their respective domestic laws by 2027. It is important to note that the OECD has 38 members, primarily located in Europe.
For those interested in the crypto scene, Toronto has emerged as a prominent hub. Known as “Crypto City,” it offers a comprehensive guide to the crypto industry in the area.