In the latest sign that governments are looking for ways to boost the monitoring of the wealth transference taking place across the rapidly-growing, global cryptocurrency network, the OECD on Monday released a public consultation document that it says is aimed at informing cryptocurrency industry stakeholders of the plans, as well as inviting them to comment on them.
Comments must be received no later than April 29 (details at the end of this article), the OECD (Organisation for Economic Cooperation and Development) said.
In a 101-page "public consultation document," which may be viewed on the OECD's website by clicking here, the OECD details how it sees its new global tax transparency framework working, alongside its existing Common Reporting Standard, to oversee the reporting and exchange of information with respect to crypto-assets. The Common Reporting Standard, or CRS, is a global system whereby more than 100 countries automatically exchange tax-relevant banking and other financial information about oen another's citizens. It was modeled on the U.S. Foreign Account Tax Compliance Act, although thus far the U.S. has not agreed to be part of it.
The OECD's announcement came just days after the U.S. Internal Revenue Service formally reminded U.S. taxpayers not to miss the "virtual currency question" at the top of the tax returns they're currently in the process of filing for 2021.
'Crypto-assets could be exploited'
In its statement outlining its plans for the public consulation, the OECD noted that the use of crypto-assets by ordinary individuals and investors "for a range of investment and financial activities" had grown rapidly in recent years.
However, "unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, and without any central administrator having full visibility on either the transactions carried out, or crypto-asset holdings," it added.
"Therefore, crypto-assets could be exploited to undermine existing international tax transparency initiatives, such as the CRS.
"Against this background, the G20 has asked the OECD to develop a framework for the automatic exchange of information on crypto-assets.
"This new framework provides for the collection and exchange of tax-relevant information between tax administrations, with respect to persons engaging in certain transactions in crypto-assets.
"It covers crypto-assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries, as well as asset classes relying on similar technology that may emerge in the future.
"Individuals and entities that, as a business, provide services to exchange crypto-assets against other crypto-assets, or for fiat currencies, must apply the due diligence procedures to identify their customers, and then report the aggregate values of the exchanges and transfers for such customers on an annual basis."
Alongside the Crypto-Asset Reporting Framework (CARF), the OECD said, it has also developed certain other new proposals "as part of the first comprehensive review of the CRS, with the aim of further improving the operation of the CRS, based on the experience gained by governments and business over the past seven years since its adoption." These are also part of the overall framework the OECD says it's seeking comment and feedback on.
A public consultation meeting on the matter will take place at the end of May, on a date yet to be disclosed.
Based in Paris, the OECD is an intergovernmental economic organization with 38 member countries. It was founded in 1961 to, as its name implies, stimulate economic progress and development through enlightened cooperation and shared goals.