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  • Writer's pictureKichik & Rosas, S.C.

The Crypto-Asset Reporting Framework (“CARF”)

OECD presents new transparency framework for Crypto-Assets to G20


“The new transparency initiative, developed together with G20 countries, comes against the backdrop of a rapid adoption of the use of Crypto-Assets for a wide range of investment and financial uses. Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, such as banks, and without any central administrator having full visibility on either the transactions carried out or on crypto-asset holdings”.

-oecd.org (October 10th, 2022)-


On the following article you will find a summary of the OECD framework and our comments under a Mexican tax perspective.


The Crypto-Asset Reporting Framework (“CARF”)


The market of Crypto-Assets has been growing rapidly in the past few years. Cryptocurrencies and other cryptography-based tokens have been used for a wide range of transactions, including tax-relevant activities, leaving tax authorities without the necessary visibility on this type of transactions. Likewise, taxpayers have been struggling with domestic and international tax reporting and compliance while using or investing in Crypto-Assets.

As a result, the Organization for Economic Cooperation and Development (“OECD”) published on October 10th, 2022, the CARF and Amendments to the Common Reporting Standard (“CRS”) which consists of rules and commentaries that can be adopted by domestic tax administrations, including: a framework of bilateral or multilateral agreements for automatic exchange of information between jurisdictions; IT solutions to support the exchange of information; and a further elaboration of requirements for the CARF to ensure its effective implementation.


The CARF has been designed around the following four key building blocks:


First block - Scope of Crypto-Assets to be covered


The scope of the proposed definition of Crypto-Assets encompasses those that can be used for investment and payment purposes, including, among others, stable coins, derivatives issued in form of a Crypto-Asset and certain non-fungible tokens (“NFTs”).


Therefore, reporting obligations do not apply to the following Crypto-Assets: those that cannot be used for payment or investment purposes; Central Bank Digital Currencies (with similar functions to money held in a traditional bank account); and Specified Electronic Money Products that represent a single Fiat Currency and are redeemable at any time in the same Fiat Currency at par value as a regulatory matter.


Second block - Intermediaries and other service providers in scope


Reporting will be required to those entities or individuals that as usual business provide services through exchange transactions in relevant Crypto-Assets, including Crypto Exchanges, wallet service providers and Crypto ATM operators that are in the possibility to collect and review the required documentation of their customers.


Third block – Reportable transactions


The relevant reportable transactions under the CARF are: the trade between Crypto-Assets and Fiat Currencies; exchanges of one or more types of Crypto-Assets; and high value transfers (including Reportable Retail Payments) of Crypto Assets.


The abovementioned transactions would be reported on an aggregate basis to enhance the usability of data for the tax administrations.


Fourth block - Due diligence procedures


Self-certification requirements for Crypto-Asset Service Providers under the CRS and Financial Action Task Force (“FATF”) would be built to implement procedures aiming to identify its users and to determine the tax jurisdiction for reporting purposes.


Our expectations


Clearly, the CARF Report is a great step to Crypto-Assets regulations as it will give domestic authorities certain guidelines to determine, among others, definitions, valuation methods and reporting standards to Crypto-Assets for tax purposes. Nevertheless, an uncertain atmosphere will remain when talking about Crypto and taxes. We face a long journey for a Crypto-Asset comprehensive tax regulation.


We have witnessed Mexican tax authorities having fast adoption of regulations issued by the OECD, therefore, we expect there would be some reforms or additions to tax legislation in which CARF framework will be adopted in some way.


As for now, the scope of the Mexican Fintech Law is limited to Crypto trading and Financial Technology Service Providers for regulatory purposes. Taxwise, Mexican legislation is way behind while it understands Crypto-Assets as intangible goods; such misconception clearly detaches from Crypto full functionality and triggers irrational tax effects and reporting obligations on Crypto transactions.


Our team will be monitoring closely any related update or modifications on Mexican tax legislation for any further matter.

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