The UAE is set to enhance its position as a global financial hub by adopting the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF), a move that will bring greater tax transparency but also new compliance challenges for the region’s crypto businesses. According to Sergey Panov, CEO of accounting startup Oncount, this adoption is a major step that will reshape how crypto-related businesses operate in the country. The new rules are scheduled to come into force in 2027.
Bolstering Global Credibility
By signing on to CARF, the UAE aligns itself with leading financial centres like the UK, Switzerland, and most EU countries, reinforcing its commitment to international standards. This move complements the UAE’s recent removal from the Financial Action Task Force’s (FATF) grey list and the EU’s high-risk list, milestones that have significantly boosted its reputation. “The UAE’s alignment with FATF, EU directives and OECD tax frameworks, coupled with VARA’s evolving rulebook and supervisory maturity, positions the country as a credible and investable centre for digital finance,” said Edwin Mata, CEO of Brickken.
New Compliance Hurdles for Crypto Platforms
The CARF framework mandates the automatic exchange of tax-related information between signatory jurisdictions. This means UAE-based crypto platforms, including exchanges, brokers, and wallet providers, will be required to implement new procedures. These companies must collect tax-residency self-certifications from their customers, perform enhanced due diligence on transactions, and submit comprehensive reports to the UAE’s Ministry of Finance. This will necessitate changes to Know Your Customer (KYC) workflows, annual reporting operations, and terms of service.
A Challenge for Smaller Players
While the new regulations are expected to build trust in the ecosystem, they will also introduce a significant administrative burden. Industry experts predict an increase in accounting and compliance demands that could disproportionately affect smaller companies with limited resources. “Some drag is inevitable, especially for smaller crypto platforms,” Panov noted. The operational strain of these new obligations may lead to a market concentration, where larger, more structured firms can leverage compliance as a commercial advantage, potentially squeezing smaller operators out of the market.
About The Crypto-Asset Reporting Framework (CARF)
Developed by the Organisation for Economic Co-operation and Development (OECD), the Crypto-Asset Reporting Framework (CARF) is a global standard for the automatic exchange of information on crypto-asset transactions for tax purposes. It ensures that tax authorities receive timely and standardized information from crypto-asset service providers in their jurisdiction. The framework aims to combat tax evasion and improve tax transparency in the rapidly growing digital asset space by creating a level playing field for both traditional financial institutions and crypto platforms.
Source: AGBI
