Americans’ Offshore Crypto Accounts Face Tax Crackdown

The days of parking cryptocurrency in foreign exchanges to avoid tax crackdown may soon be over for Americans. President Trump’s administration now weighs a Treasury Department proposal that would expose Americans’ offshore digital asset accounts to Internal Revenue Service (IRS) scrutiny—the U.S. federal agency responsible for tax collection and enforcement.

The Treasury Department submitted its draft rules to the White House on November 14. These draft rules outline requirements for U.S.-based crypto brokers to report cryptocurrency transactions (including wallet addresses, transaction details, and holdings) to foreign authorities under reciprocal agreements, while enabling the IRS to automatically receive similar data on U.S. taxpayers’ offshore activities from foreign providers.

The new rules are linked to the U.S. being a part of the Crypto-Asset Reporting Framework (CARF), the international standard that forces overseas crypto exchanges operating in CARF-participating jurisdictions to send their U.S.-based customers’ trading information to the IRS, just like many regular banks have been doing for years.

Levelling the Playing Field

While the U.S. gave its political commitment to CARF in a 2023 joint statement with 48 other jurisdictions (aiming for exchanges to start by 2027), it has not yet fully signed binding agreements or enacted it into law. The new proposed U.S. rules will provide the domestic framework to implement CARF. They will also enable reciprocal global exchanges by requiring foreign crypto service providers in CARF-participating jurisdictions to report U.S. taxpayers’ activities directly to the IRS.

U.S. Administration officials defend the proposal as essential for closing offshore loopholes that allow Americans to move digital assets abroad undetected. The White House stated in July that CARF adoption would prevent US crypto platforms from facing competitive disadvantages while discouraging taxpayers from hiding assets overseas.