CARF Is Coming: What Crypto Investors Need to Know

This article is for information only and isn't tax or legal advice. Talk to a professional for your specific situation.

If you hold crypto on exchanges, you're going to hear a weird new acronym more and more: CARF.

CARF is basically a new global system where tax authorities get information about your crypto accounts directly from exchanges, then share that data with each other.

It doesn't create new taxes. It just makes you more visible.

Here’s the part people tend to miss: the story doesn't start in 2027 when the first reports get exchanged. For most early-adopting countries, exchanges have to start collecting CARF-grade data from 1 January 2026, so the reports sent in 2027 will already cover a full year of your activity.

The plumbing for that is being built now. The real question is whether your own records will be good enough to match whatever eventually lands on your tax authority's desk.

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What is CARF?

CARF stands for Crypto-Asset Reporting Framework. It's an OECD standard – the same people who created the Common Reporting Standard for bank and brokerage accounts.

That earlier standard forced banks to automatically share information about your accounts with the country where you’re tax resident.

CARF extends that idea to crypto:

• Who has to report? Centralised exchanges, custodial wallets, brokers – any intermediary that holds or handles crypto for customers.

• What's in scope? Most tradeable tokens used as investment or payment, including many stablecoins and tokenised assets.

• What it doesn't do It doesn't introduce new taxes or rates. It just gives tax offices much better data to apply rules they already have.

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What data will exchanges report?

Under CARF, platforms send standardised annual reports to their local tax authority. Two big buckets matter for you.

Your identity and tax residence

The stuff you already gave them in KYC:

• Name and date of birth
• Address
• Country (or countries) of tax residence
• Tax ID (where applicable)

The difference is that under CARF this becomes part of an automatic data feed to tax authorities, not just something they hold for AML.

Your transactions

For each reportable user, platforms report for example:

• Crypto-to-fiat trades (BTC → USD)
• Crypto-to-crypto trades (ETH → USDC)
• Certain transfers, including to self-custody wallets above thresholds
• Some retail payments in crypto if they're big or frequent enough

Plus timestamps, asset identifiers, amounts and fiat valuations.

So even if your tax office doesn't see every DeFi hop, they'll see the on-ramps, off-ramps and most of what happened on major centralised platforms.

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Timeline: when does this hit?

Different countries are on slightly different schedules. But the pattern is clear:

1. Platforms start collecting CARF-grade data before the first exchange year (for most, from 2026).
2. Tax authorities receive that data 1–2 years later through automatic exchange.

You don't see “Download CARF XML” buttons in your exchange account yet because it's still being wired up. But crypto is going the same way bank accounts already went.

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“But I self-custody, so I'm fine”

Self-custody is great for security and control. It's not an invisibility cloak.

CARF focuses on intermediaries. That means:

• When you on-ramp or off-ramp via a big exchange, that's reportable.
• When you move funds between a CEX and your own wallet, those transfers can be reportable.
• If you regularly bridge assets through a custodian that falls under CARF, that gets logged.

Tax authorities don't need to see every DeFi pool you've ever touched. They just need to see that serious value moved through centralised platforms and never got declared.

Self-custody helps with platform risk. It doesn't make the taxable reality disappear.

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What this changes for you

The “they'll never find it” bet gets worse every year

For a lot of people, crypto non-compliance has been a detection game: “Will they ever know about that Binance account from 2019?”

With CARF, that bet weakens fast. The data is structured, automatically exchanged and designed to match against your tax return. Historic years are a grey area, but going forward, assuming invisibility is wishful thinking.

Record-keeping becomes essential

When you've got exchange exports, future CARF-style reports and on-chain data floating around, you need your own clean records to reconcile everything.

• What did you actually buy and sell?
• What was the cost basis?
• What was just a transfer between your own wallets?

Without that, any tax audit gets painful quickly.

Cross-border life gets more transparent

If you live or move between countries, CARF fits into the broader automatic-exchange ecosystem. Country A sees you as tax resident and receives data from exchanges in Countries B, C, D.

The “my exchange is in X, my tax residence is in Y, they'll never talk” days are fading.

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Why I'm building UpdraftFi for this

There’s a difference between:

• Platforms that hold your assets and report on you (exchanges, custodial wallets), and
• Tools that help you see your own picture and stay organised.

CARF targets the first group.

UpdraftFi sits in the second. It doesn't hold your funds or trade for you. It's designed to help you track, categorise and understand your holdings across wallets, exchanges and chains, in one place, with a privacy-first approach.

In the CARF era, your tax authority is going to have a detailed file on your crypto activity. You should probably have one too. Ideally a better one – under your control, not theirs.

Some of that is already live in UpdraftFi (portfolio tracking, multi-wallet views, classifications). The rest – especially tax-oriented features – is what I'm actively building towards.

If you want to get organised before the CARF wave hits rather than after, that’s exactly what UpdraftFi is for.

Get started with UpdraftFi

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How to future-proof yourself

You don't need to become a full-time tax nerd. But you do need a system.

You’ve basically got two options:

• cobble that system together yourself with exports and spreadsheets, or
• use a tool that’s being built specifically for the CARF era.

Either way, the core steps are the same.

Centralise your data. Pull exports from exchanges periodically and bring them into one place instead of seven dashboards and three inboxes. → UpdraftFi’s job is to be that one place: connect wallets, track exchanges and keep a consistent, private portfolio history.

Separate moves from income. A transfer from Exchange A to Wallet B isn't income, but a trading profit is. If you can't tell the difference in your history, your tax office probably can't either. → UpdraftFi helps you tag, classify and group transactions so “just a move” doesn’t get mixed up with real gains, rewards or spending.

Understand the basics in your country. Capital gains, income, wealth tax? Long-term vs short-term? Staking and airdrops? Know the rules that apply to you. → UpdraftFi won’t replace a tax advisor, but it can give you clean, structured data to hand them instead of a pile of CSVs.

Use the next year or two as a reset. If you have messy history, talk to a professional about cleaning it up before CARF data starts flowing in your country. Going forward, act like the major exchanges will eventually talk to your tax office. Because they will. → UpdraftFi is being built so that, once you’ve done that reset, staying organised is the default – not a once-a-year panic.

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Closing thought

CARF isn't the end of crypto. It's the end of the “nobody will ever know” phase.

If you treat it as a signal to tighten your records, organise your accounts and get ahead of what's coming, you'll be in a much better spot than the crowd who ignores it until their name shows up in some data-matching algorithm.

The whole point of UpdraftFi is simple: if they ever ask, you don’t panic – you just open your dashboard.

Get started with UpdraftFi