Canada is preparing to implement 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 adopt the CARF by 2027.
Under the CARF, crypto asset service providers (CASPs), including cryptocurrency exchanges, brokers, dealers, and automated teller machine operators, will face new reporting obligations. These requirements apply to both individuals and businesses. The supplementary report provided examples of crypto assets, such as stablecoins, derivatives in the form of a crypto asset, and specific nonfungible tokens.
CASPs will be required to report transactions involving fiat and crypto assets to the Canada Revenue Agency (CRA). Additionally, any crypto asset transfers exceeding $50,000 USD, including payment processing, must also be reported. The CARF applies to CASPs operating within Canada or conducting business in Canada. Both Canadian residents and nonresidents, whether individuals or entities, will be subject to reporting.
It is important to note that the CARF does not cover central bank digital currency or “digital representations of fiat currencies” (such as stablecoins). These assets fall under the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS), which has been amended to account for them and facilitate information sharing among international tax authorities.
Similar to the CRS, information collected under the CARF will be shared internationally. Developed by the OECD, the CARF was introduced during a meeting of G20 finance ministers and central bank governors in October 2022. In November 2023, 47 countries pledged to incorporate the CARF into their domestic laws by 2027. The OECD, which mainly consists of European members, oversees the implementation of the CARF.
For those interested in the crypto scene in Toronto, check out “Crypto City,” a magazine that serves as a guide to all things crypto in the city.
Source: Luke Belmar
