OECD Crypto-Asset Reporting Framework | Cadwalader, Wickersham & Taft LLP

By on April 22, 2022 0

On March 22, 2022, the Organization for Economic Co-operation and Development (“OECD”) released a public consultation document proposing new and amended reporting requirements for crypto-assets and e-money products, as well as proposed changes to the Common Reporting Standard. (“CRS”) for the automatic exchange of financial account information between countries.


The rapid adoption of crypto-assets for a range of financial and investment activities has posed challenges for national tax administrations in recent years. Unlike traditional financial products, crypto-assets can be transferred and held without the involvement of traditional financial intermediaries. There is no central global organization or regulator that provides full visibility into transactions made by, or crypto-asset holdings, individuals, companies, or funds. It is therefore not surprising that national and global tax administrators are concerned that crypto-assets are being exploited to undermine existing international tax transparency initiatives, such as the CRS.

Framework for crypto-asset reporting

The OECD’s publication of its Crypto-Asset Disclosure Framework (the “Framework”) was requested by the G20 to serve as a stand-alone framework for the automatic exchange of information on crypto-assets. A crypto-asset is broadly defined in the framework as “a digital representation of value that relies on a crypto-secured distribution ledger or similar technology to validate and secure transactions.” The definition used for “cryptoasset” is broad, encompassing stablecoins, derivatives issued in the form of a cryptoasset, and certain non-fungible tokens. In order to future-proof the Framework as much as possible, the scope of crypto-assets covered includes asset classes based on similar technology that may emerge in the future.

The framework provides for the collection and exchange of tax information between tax administrations, with respect to persons carrying out certain transactions in crypto-assets. Draft rules and commentary on these provisions are included in the framework and cover crypto-assets that can be held and transferred in a decentralized manner, without the involvement of traditional financial intermediaries.

Frame Scope

Persons and entities that provide a commercial crypto-asset transfer service, or that exchange crypto-assets for other crypto-assets or for fiat currencies, will be required to apply the Framework’s due diligence procedures to identify their customers and then report annually the aggregate values ​​of transfers and exchanges for these customers. The scope of reporting under the framework is therefore intended to extend to a wide range of intermediaries that facilitate crypto-asset exchange and transfer transactions. Brokers and traders, custodians, financial exchanges, merchants accepting crypto-assets, e-wallet services and even crypto-asset ATMs will therefore be included in the reporting required under the framework. A limited range of assets are excluded from the reporting framework – including central bank digital currency and closed-loop crypto-assets – when these are not considered by the OECD to pose systemic risk to investors. tax authorities.

The intention is that the framework will be transposed into national law in order to facilitate the collection of information from resident crypto-asset intermediaries. Local provisions will be supplemented by bilateral or multilateral agreements between competent authorities for the automatic exchange of information collected under the framework, on the basis of double taxation conventions and the convention on mutual administrative assistance. in tax matters.

Proposed CRS Amendments

In addition, the OECD has also proposed some changes to the CRS, with the aim of further improving the operation of the CRS to cover various digital financial products, including e-money products and Central Bank digital currencies. These proposals include changes to cover indirect investments in crypto-assets, which is achieved through proposed changes to the wording of “Investment Entity” and “Financial Asset”. The intention is to ensure that the CRS encompasses derivatives referencing crypto-assets held in custody accounts and investment entities investing in crypto-assets. The proposal also contains new provisions to ensure effective interaction between the CRS and the framework, in particular to limit instances of duplication of reporting and to improve due diligence procedures and the usability of CRS information for tax administrations and financial institutions.

The public consultation closes on April 29, 2022 and will be followed by the OECD report to the G20 in October 2022.