White House Review Advances Proposed IRS Rule to Tax Americans’ Foreign Crypto Holdings

The proposal would implement the Crypto-Asset Reporting Framework (CARF), an international standard created in 2022 by the Organization for Economic Cooperation and Development, Decrypt reported Monday. CARF provides for automatic information-sharing across participating jurisdictions to reduce offshore tax evasion involving digital assets, similar to the existing Common Reporting Standard for bank accounts. Most G7 countries and several major crypto hubs, including Singapore, the UAE and the Bahamas, have already agreed to participate.

The Treasury rule arrived at the White House for review last week, according to a federal regulatory site. If approved, it would authorize the IRS to access information on cryptocurrency accounts held by Americans through foreign exchanges or digital asset service providers, giving the agency a clearer view into cross-border crypto holdings and potential undeclared tax liabilities. Administration officials have endorsed the policy, arguing it would deter taxpayers from shifting digital assets offshore to avoid tax obligations.

The administration previewed the push for foreign crypto reporting in a 168-page crypto policy report published in July by the President’s Working Group on Digital Asset Markets. The report urged Congress to require U.S. taxpayers and businesses to report “foreign digital asset accounts” on their tax filings as part of a broader tax compliance agenda for digital assets.

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The Working Group warned that offshore exchanges and cross-border transfers create “an offramp” for U.S. taxpayers seeking to evade tax obligations, and that the absence of equivalent reporting requirements placed domestic exchanges at a “structural disadvantage.” Requiring reporting under CARF, the administration said, would “promote the growth and use of digital assets in the United States” by reducing incentives to move activity overseas.

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The report defined foreign digital asset accounts as those held with a foreign digital asset exchange or service provider, while emphasizing that expanded reporting rules “should not impose any new reporting requirements on DeFi transactions.” The administration reiterated that position as the CARF rule progressed to White House review.

If adopted, the rule could mark the most significant shift in U.S. crypto tax enforcement since Congress expanded broker-reporting requirements in 2021, per Decrypt. CARF implementation is scheduled to begin globally in 2027, giving U.S. regulators time to integrate new reporting channels into IRS examination and compliance systems.

While the administration framed the measure as pro-innovation, it also placed it within a broader digital asset regulatory agenda. The July policy report recommended reforms related to stablecoin oversight, crypto banking access, market structure rules and illicit finance.

If finalized, the foreign crypto reporting rule would align the United States with a growing international consensus that digital assets require shared tax enforcement mechanisms. Administration officials have warned that failing to join CARF could disadvantage U.S. exchanges and cause capital flight to jurisdictions with lower transparency.

The White House review signals that the administration is preparing to translate its policy blueprint into regulation, setting the stage for potential congressional action and expanded IRS authority over Americans’ offshore crypto activities.