Hong Kong has opened a public consultation on implementing the OECD’s Crypto-Asset Reporting Framework (CARF) and updating its Common Reporting Standard (CRS), a move designed to tighten cross-border crypto tax reporting and reduce evasion. Secretary for Financial Services and the Treasury Christopher Hui framed the initiative as necessary to align the city with international tax transparency standards and to preserve its standing as a global financial centre.
CARF rollout, legislative roadmap and scope
The consultation invites feedback on proposed amendments to the Inland Revenue Ordinance and is scheduled to run until February 6, 2026. The government plans to enact legislative changes in 2026, begin automatic exchanges of crypto-asset tax information with qualified partner jurisdictions in 2028, and target fuller CRS implementation for expanded digital products by 2029. CARF is a global framework that mandates standardized automatic exchange of tax-relevant information on crypto-asset transactions between participating jurisdictions, while the CRS is the broader international standard for automatic exchange of financial account information.
Proposals include mandatory registration for financial institutions and crypto service providers, stronger enforcement powers and higher penalties for breaches. The government intends to engage in reciprocal exchanges only with partner jurisdictions that meet strict confidentiality and data-security standards, presenting these safeguards as essential both to protect taxpayer data and to maintain favourable outcomes in international peer reviews.
Hong Kong’s proposals address reporting requirements for intermediaries and custodial service providers, but the framework’s effectiveness will hinge on how “in-scope” entities are defined and how decentralized systems are treated. Decentralized finance (DeFi) protocols and DAOs challenge traditional reporting models because they may operate without clear legal controllers or legal personality, making it difficult to fit them into a regime built around identifiable intermediaries.
The consultation also notes that inherited CRS vulnerabilities — such as the “Active Entity” designation that exempts some closely held entities from beneficial-owner reporting — can be repurposed to obscure crypto holdings. Officials acknowledge that remote account opening, limited human oversight and structural workarounds could create reporting blind spots, framing these as operational and legal challenges that future rulemaking must address.
Hong Kong’s consultation sets a clear regulatory runway: legal amendments in 2026, information exchange beginning in 2028 and broader CRS coverage by 2029. For institutional treasuries, custodians and node operators, the immediate implication is the need to map entity roles and reporting responsibilities now, particularly where decentralized protocols blur points of control.