Effective January 1, 2026, Canada will implement the OECD’s Crypto-Asset Reporting Framework (CARF), extending the automatic exchange of information (AEOI) into the digital-asset ecosystem. CARF complements CRS 2.0, which governs traditional financial accounts and e-money products, by establishing a standardized framework for reporting cryptocurrencies, stablecoins, NFTs, and certain DeFi positions.
Canadian Reporting Crypto-Asset Service Providers (RCASPs) must prepare for full operational compliance, which includes TIN validation, enhanced due diligence, precise transaction capture, and XML-based reporting, with the first international exchanges scheduled for 2027, covering 2026 transactions.
International Coordination and Policy Context
Canada’s CARF implementation is part of a global collective effort to enhance crypto-asset transparency. On November 10, 2023, Canada joined 66 other jurisdictions in a joint statement endorsing CARF. Signatory countries include G20 members, EU states, Asia-Pacific hubs, key offshore financial centers, as well as the Crown Dependencies of Guernsey, Jersey, and the Isle of Man, and UK Overseas Territories such as the Cayman Islands and Gibraltar.
The statement emphasizes that swift and consistent implementation of CARF is critical to preserve recent gains in global tax transparency and prevent tax evasion in the rapidly evolving crypto market. By aligning domestic legislation with CARF and activating cross-border exchange agreements in time for 2027, Canada and other jurisdictions aim to ensure tax compliance, protect public revenues, and create a level playing field for businesses and investors. Signatory countries also commit to implementing CRS 2.0 amendments in parallel, maintaining consistency across traditional and digital financial accounts.
This coordinated approach ensures that no jurisdictions become blind spots for crypto tax reporting, strengthening the integrity of the OECD-led global AEOI networks
Scope and Applicability
CARF applies to any entity that effectuates reportable transactions on behalf of users, including centralized exchanges, custodial wallet providers, payment platforms, and certain DeFi protocols where the provider can execute transactions.
The framework mandates reporting for a broad range of assets:
- Major cryptocurrencies, including Bitcoin, Ethereum, and XRP
- Stablecoins and algorithmic tokens
- NFTs used as financial assets, payments, or investment instruments
- DeFi positions where an RCASP effectuates the relevant transaction
Reportable activity includes crypto-to-crypto trades, crypto-to-fiat exchanges, transfers to unhosted wallets, inbound and outbound transfers, staking rewards, and airdrops. Reportable retail payment transactions—crypto used for goods or services—are only reported if the transaction exceeds USD 50,000. All activity must be aggregated annually per user and reported in the CARF XML Schema, ensuring compliance with global technical standards.
Customer Due Diligence and TIN Verification
At the core of CARF compliance is rigorous customer due diligence. RCASPs must collect and verify:
- Tax Identification Numbers (TINs)
- Tax residency information
- Identity of users and controlling persons
Where a TIN is unavailable or not issued, a placeholder such as “NOTIN” (or codes like CARF0001 for “TIN not obtained”) must be applied and flagged in the XML report, with the reason documented. Continuous validation ensures data integrity, traceability, and alignment with cross-border reporting obligations.
TIN verification is central to CARF, linking transactions to the correct tax authority. Errors or inconsistencies can trigger multi-jurisdictional audits or penalties, underscoring the operational and strategic importance of accurate due diligence.
Transaction Capture and Reporting
RCASPs must maintain detailed records of all reportable transactions, including type, timestamp, wallet addresses, asset quantities, and fiat-equivalent values in ISO 4217 currency codes. Data must be aggregated per user, validated against the CARF XML Schema, and retained for at least six years in accordance with Canadian tax record-keeping standards.
Annual submissions to the CRA are followed by international exchanges via the OECD AEOI network, ensuring global traceability and reinforcing Canada’s commitment to coordinated CARF implementation.
CARF XML Schema
The CARF XML Schema ensures technical consistency and audit readiness, providing structured reporting for international exchange. Key components include:
- Message Header: Sending and receiving authorities, reporting period, message type, timestamps
- Organization Party Section: RCASP identity, jurisdiction, internal identifiers
- Person Party Section: Users, controlling persons, TINs, addresses, and birth information
- Transaction Body: All reportable transactions, including crypto-to-crypto trades, crypto-to-fiat exchanges, transfers to unhosted wallets, and reportable retail payment transactions
Integration with XML reporting tools allows RCASPs to produce fully compliant, audit-ready submissions.
Implementation Timeline
Canada’s CARF rollout follows a structured schedule:
- August 15, 2025 – Draft legislative amendments issued
- September 12, 2025 – Public consultation concluded
- January 1, 2026 – Due diligence and data collection obligations begin
- 2027 – First annual XML submissions for 2026 transactions
- 2027–2028 – Cross-border automatic exchange via the OECD network
RCASPs must complete system readiness, account remediation, and staff training prior to January 2026. As of November 2025, final legislation has not yet been enacted, but draft proposals are proceeding without changes from Budget 2025.
Operational and Compliance Requirements
RCASPs must implement robust operational procedures: onboarding, TIN and identity verification, continuous transaction monitoring (including unhosted wallets and high-value exchanges), aggregation and validation, and long-term record retention.
Crypto-asset users should consolidate custodial wallets, link accounts to verified TINs, maintain detailed transaction ledgers, and engage international tax advisors to reconcile CARF reporting with domestic obligations.
Automation and Compliance with TaxDo
Given the complexity and scale of CARF reporting, automation is essential for operational efficiency. Platforms like TaxDo provide end-to-end solutions for TIN validation, identity verification, transaction capture, and XML reporting:
- Global Tax Ledger (GTL) – Validates TINs directly against official tax authority databases in over 130 countries, producing CARF-compliant XML reports ready for submission.
- Global Identity Verification (GSV) – Checks TIN format, structure, and checksum across 195+ jurisdictions, ensuring accuracy when direct authority verification is unavailable.
- Global Identity Intelligence Engine (GIIE) – Continuously screens users against over 290 international watchlists, including AML, PEP, and sanctions databases, automatically flagging changes in status.
TaxDo streamlines workflows by automating form collection, e-signatures, ongoing due diligence, and domestic XML reporting. Practical compliance measures include consolidating wallets, maintaining detailed ledgers with timestamps, wallet addresses, asset quantities, and fiat-equivalent values, and retaining records for the legally mandated period. By embedding these processes into operational workflows, RCASPs can reduce manual error, mitigate regulatory risk, and maintain compliance across jurisdictions.
Integration with CRS 2.0 and Global Reporting
CARF operates alongside CRS 2.0, covering traditional financial accounts and selected digital instruments. Institutions active in both areas may face dual reporting obligations. Globally, EU member states, G20 countries, and Asia-Pacific crypto hubs are implementing CARF aligned with CRS/FATCA infrastructure, validating TINs, enforcing thresholds, and contributing to the OECD AEOI network—a coordinated international compliance effort.
Canada’s inclusion in the joint CARF statement underscores the country’s commitment to consistent, timely, and harmonized implementation, leaving no jurisdiction as a blind spot for tax reporting.
Conclusion
CARF transforms crypto-asset transparency and cross-border reporting in Canada. Compliance is operational, technical, and strategic. RCASPs and crypto-asset users must ensure accurate TIN validation, comprehensive transaction capture, long-term record retention, and adherence to CARF XML standards. By proactively preparing, leveraging automation, and engaging professional advisory support, institutions and users can achieve regulatory alignment, operational efficiency, and audit readiness, while participating fully in the global crypto compliance ecosystem.