All financial institutions subject to the Common Reporting Standard (CRS) should now be implementing updated processes and systems to be ready to comply with CRS 2.0 from 1 January 2027. Despite being part of the same package of reforms as the Crypto-Asset Reporting Framework (CARF), CRS 2.0 applies to all reporting financial institutions regardless of whether they maintain crypto or digital asset products.
Crypto-asset service providers should be ready to comply with new CRS-type rules from 1 January 2027, as a result of the extension of CRS to crypto-assets. The Australian Government has also announced that it would extend CARF to domestic crypto tax transparency reporting.
Reporting entities should not wait for the Australian enabling legislation to be passed before considering the required update to processes and systems, due to the impending start date. Entities should review the forthcoming draft legislation for any differences to the OECD positions.
Key proposed changes to the CRS under CRS 2.0 (applicable to all reporting financial institutions)
Enhanced due diligence and reporting
- Additional reporting categories: Financial institutions will be required to report additional information, including:
- whether the relevant account holder or controlling person has provided a valid self-certification;
- whether the account is a joint account;
- the roles of controlling persons (e.g. beneficial owners, trustees, senior managing officials);
- whether the account is a pre-existing or new account; and
- the account type (Depository, Custodial, etc).
- Stricter AML/KYC alignment: AML/KYC procedures cannot be relied upon to determine the controlling persons of a new entity account holder unless those procedures align with the 2012 FATF Recommendations or substantially similar procedures.
- Government Verification Services (GVS): GVS will be reflected within the CRS due diligence procedures.
- Non-profit organisations: A new optional Non-Reporting Financial Institution category will be introduced for investment entities that are genuine non-profit organisations.
- Capital contribution accounts: A new Excluded Account category will be created for capital contribution accounts.
- Publicly listed companies: Where a publicly listed company exercises control over an account holder that is a passive NFE, there will be no requirement to determine the controlling persons of that company if it is already subject to adequate beneficial ownership disclosure requirements.
Expanded scope — digital financial products
- Electronic money products and CBDCs: The definition of "depository institution" will be expanded to include e-money providers, and the definition of "depository account" will be expanded to include accounts holding specified electronic money products and central bank digital currencies (CBDCs).
- Indirect crypto-asset investments: Derivatives referencing crypto-assets and investment vehicles that invest in crypto-assets will be brought within scope of the CRS, closing potential reporting gaps between the CRS and the new CARF.
- New excluded accounts: Certain low-risk digital money products, including specified electronic money products below a de minimis value and those created solely to facilitate a funds transfer, will be excluded from CRS reporting.
The above lists are not exhaustive.
ATO Stakeholder Update: CRS XML Schema v3.0 Transition
On 2 October 2026, the ATO issued Stakeholder Update 44 providing guidance on the transition to CRS XML Schema v3.0, which takes effect from 1 January 2027. The guidance indicated that reporting financial institutions may report the new CRS data elements, use transitional “not reported” codes, or a combination of both for reports due by 31 July 2027. Reporting financial institutions are requested not to submit files between 15 December 2026 and 15 January 2027 while ATO system updates are deployed. Other reporting related guidance was also released.
The ATO will not accept lodgements under CRS XML Schema v2.0 from 1 January 2027.
Crypto-Asset Reporting Framework (CARF) (applicable to reporting crypto-asset service providers)
Alongside the CRS amendments, Australia will implement the CARF, which creates new due diligence and reporting obligations for Reporting Crypto-Asset Service Providers covering exchanges and transfers of crypto-assets. Australia has committed to a CARF effective date of 1 January 2027, with the first exchange of information under the CARF expected to commence in 2028.
Crypto-Assets
The proposed definition of “Crypto-Assets” focuses on the use of cryptographically secured distributed ledger technology. The definition also includes a reference to “similar technology” to ensure it can include new technological developments that emerge in the future and that operate in a functionally similar manner to Crypto-Assets.
The definition of Crypto-Assets targets those assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries, including stablecoins, derivatives issued in the form of a Crypto-Asset and certain non-fungible tokens.
There are three categories of Crypto-Assets which are excluded from reporting requirements:
- Crypto-Assets which the “Reporting Crypto-Asset Service Provider” has adequately determined cannot be used for payment or investment purposes;
- “Central Bank Digital Currencies” (which will be included in the scope of the amended CRS as discussed above); and
- “Specified Electronic Money Products” that represent a single “Fiat Currency” and are redeemable at any time in the same Fiat Currency at par value (these will also be included in the scope of the amended CRS). These could include some types of stablecoins.
Entities or individuals that provide services effecting exchange transactions in Crypto-Assets as a business for or on behalf of customers would be considered “Reporting Crypto-Asset Service Providers” under the CARF. Such entities would be subject to the CARF due diligence and reporting requirements for Relevant Crypto-Assets.
Relevant Transactions subject to reporting
The following three types of transactions are “Relevant Transactions” that are reportable under the CARF:
- exchanges between Relevant Crypto-Assets and Fiat Currencies;
- exchanges between one or more forms of Relevant Crypto-Assets; and
- Transfers of Relevant Crypto-Assets.
The information to be reported broadly includes:
- for Crypto-Asset to Fiat Currency transactions, the fiat amount paid or received (being the acquisition amount or gross proceeds);
- for Crypto-Asset to Crypto-Asset transactions, the value in Fiat Currency of the Crypto Asset (at acquisition) and the gross proceeds (upon disposal); and
- for Transfers of Relevant Crypto-Assets, the number of units and the total value of Transfers of Relevant Crypto-Assets effected by a Reporting Crypto-Asset Service Provider, on behalf of a Crypto-Asset User, to (for example) wallets not associated with a virtual asset service provider or a financial institution.
The CARF may also apply where a Reporting Crypto-Asset Service Provider processes payments on behalf of a merchant accepting Relevant Crypto-Assets in payment for goods or services, focusing on high-value transactions. In such instances, the Reporting Crypto-Asset Service Provider may be required to treat the customer of the merchant as a Crypto-Asset User and report with respect to the value of the transaction on that basis.
Due diligence procedures
The CARF contains due diligence procedures to be followed by Reporting Crypto-Asset Service Providers in identifying their Crypto-Asset Users and collecting relevant information.
The due diligence procedures build on the self-certification process of the CRS, as well as existing Anti-Money Laundering and Know Your Customer (AML/KYC) obligations.
Domestic CARF
The Australian Government has also announced that it would extend CARF to domestic crypto tax transparency reporting. This would assist with the ATO cracking down on Australian residents that do not pay tax appropriately on their crypto transactions.
Review the forthcoming implementing legislation when it is published
It should be noted that the Australian domestic legislation may contain some differences to the OECD model (which was one of the matters the subject of consultation). Entities should review the draft legislation closely when it is released. We note that Australia will need to sign the CARF Competent Authority Agreement and the Addendum to the CRS Multilateral Competent Authority Agreement for the exchange machinery under the new regimes to take effect.
Financial institutions and crypto-asset service providers should, however, be actively preparing their systems, processes, and governance structures in anticipation of the new requirements, given that it takes significant time to update processes and systems.
