What IRS offshore crypto reporting changes?

TLDR

The change in motion is a White House review of an IRS proposal that would let the IRS receive data on Americans crypto activity on foreign platforms via an international reporting pact. This would align with the OECDs Crypto Asset Reporting Framework and target offshore custodial accounts, while current drafts signal no new burdens for DeFi transactions. Domestic broker reporting is still coming via Form 1099?DA for U.S. platforms in 2026.

1. White House is reviewing an IRS offshore reporting proposal tied to CARF. See the review update.
2. Scope focuses on foreign custodial platforms; DeFi is out of scope for now per the current framing.
3. Separate but related, 1099?DA starts in 2026 for U.S. brokers per a policy brief.

Deep Dive

1. CARF Alignment

The proposal under review would align the U.S. with the OECD Crypto Asset Reporting Framework so the IRS can receive standardized data on U.S. taxpayers offshore crypto activity from foreign platforms. The review reached the Office of Information and Regulatory Affairs and is framed as closing gaps in cross?border crypto tax transparency per the administrations prior recommendations (review update, background on CARF timing and scope in this report).

What this means: If adopted, Americans with assets on foreign custodial exchanges would face automatic information sharing to the IRS, similar in spirit to FATCA for bank accounts.

2. What Is In and Out

Coverage would emphasize foreign custodial platforms and accounts held by U.S. persons. Current signals say DeFi transactions should not face new reporting burdens in this specific rulemaking, which narrows the immediate impact to centralized offshore venues (proposal framing, corroborating policy recap).

What this means: The near?term operational change is for customers of offshore centralized exchanges and custodians. Pure DeFi use is not in scope of this proposal, although that could change in future rulemaking.

3. Domestic 1099?DA Still Coming

Separately from offshore reporting, the IRS is moving ahead with Form 1099?DA to standardize domestic broker reporting for digital assets beginning in 2026. This creates a two?track system: 1099?DA for U.S. platforms and CARF?style data exchange for foreign platforms, tightening visibility on both sides (1099?DA brief, revenue context of an added $626 billion over 10 years in a policy note).

What this means: Expect more comprehensive reporting whether you use U.S. brokers (1099?DA) or foreign custodians (CARF data exchange), increasing the likelihood that discrepancies are flagged.

Risk note: Timelines can slip as rules move through review and implementation. Final scope, definitions, and effective dates could change during the rulemaking process.

Conclusion

The headline change is not a finalized rule but a live White House review that would plug offshore reporting gaps by aligning with CARF, aimed at foreign custodial platforms. Combined with 1099?DA for U.S. brokers in 2026, the direction of travel is broader coverage and less room for mismatches between activity and filed returns, especially for U.S. persons using offshore venues.