White House Considers New IRS Tax Rules for Foreign Cryptocurrency Accounts

The White House is currently evaluating a proposal from the IRS aimed at aligning with an international standard for taxing crypto assets. This initiative is designed to prevent Americans from shifting their digital holdings to foreign exchanges.

The proposed rule, entitled “Broker Digital Transaction Reporting,” was submitted to the White House last Friday. Its adoption would bring the US tax framework for cryptocurrency in line with 72 other nations that have vowed to implement the Crypto-Asset Reporting Framework (CARF) by 2028.

The IRS has not classified this proposal as “economically significant,” but if enacted, it could impose stricter reporting requirements on Americans concerning capital gains taxes from overseas cryptocurrency platforms.

In late July, the recommendations for crypto policies from the White House indicated that implementing CARF would discourage American tax-payers from relocating their digital assets to offshore venues, thus not disadvantaging US cryptocurrency exchanges.

Over a Third of the Globe on Board with CARF

CARF is projected to be established in 2027, with participation from 50 countries, including Brazil, Indonesia, Italy, Spain, Mexico, and the UK. Additionally, 23 countries, including the US, are expected to adopt CARF by 2028.

Established by the Organisation for Economic Co-operation and Development (OECD) in late 2022, CARF aims to facilitate data sharing among nations to combat international tax evasion.

Cryptocurrency poses unique challenges for tax authorities; users can instantly transfer assets across borders, manage holdings in self-custody wallets, and transact with anonymity.

Stricter Local Crypto Tax Regulations Coming in 2026

Starting in January 2026, the US will implement 1099-DA forms to require domestic cryptocurrency exchanges to submit detailed transaction reports, including both inbound and outbound transfers.

According to crypto tax lawyer Clinton Donnelly, the introduction of the 1099-DA marks a significant step toward reducing anonymity for cryptocurrency transactions. He stated:

“Currently, the IRS lacks immediate visibility into all activities on the blockchain. However, this will soon change. In coming years, with improved tools and data integration, the IRS will be capable of scanning blockchain networks extensively to identify significant non-compliance and target those individuals for audits.”